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Bitcoin’s failure to break above $106,000 could be an early sign that a price reversal is beginning.
Key takeaways:
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Bitcoin’s 36% rebound from $74,500 runs into resistance at $106,000.
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Bid-side liquidity is staking up on the downside near $93,000.
Bitcoin (BTC) price has rebounded by 36% from its April 9, five-month low at $74,500. However, its failure to decisively break above $106,000 has sparked concerns about whether a sharp correction is possible in the coming days.
Over 97% of Bitcoin’s holders are now in profit
Bitcoin’s recent break above $105,000 saw its price rise above the short-term holder realized price as this cohort of traders flipped some of their unrealized losses into profit.
Data from CryptoQuant reveals that less than 2.8% of Bitcoin investors were still in a position of loss when the price hovered around $102,000 on May 15, subsequently accounting for 97% of the supply in profit.
The percentage supply in profit and loss evaluates the sum of unspent transaction outputs (UTXO) that are in profit or not by comparing the price when they were last moved and the current price.
If Bitcoin continues to rise from the current levels, more investors will remain in profit. A high number of holders in profit is often seen as a sign of an overheated market, which typically precedes or coincides with price corrections.
As a result of this onchain signal, Bitcoin’s price may see pullbacks over the coming days as investors choose to book profits.
Bitcoin open interest remains high
Open interest (OI) on Bitcoin derivatives hit a near record high of $67.5 billion on May 14, as BTC came close to overcoming the resistance at the $106,000 level.
“Bitcoin is starting to look pretty exhausted here, open interest caught up to the approximate levels of prior all-time high,” said pseudonymous trader Adam in a May 15 post on X, adding:
“I think the move from 80,000 was significant enough not to see new lows, but this is not the place where I would open fresh longs.”
Additionally, Bitcoin CME futures OI also hit a 90-day high of 146,950 BTC on May 13, worth approximately $16.5 billion at the time, as per CryptoQuant data.
At the time of publication, CME had the lion’s share of the OI with 22.9%, followed by Binance with 17.4%, then Bybit with 10%.
With the current strong demand for BTC futures contracts, investors are contemplating the possibility of a pullback similar to the one that occurred in late January, when BTC prices dropped almost 16% within seven days, setting a swing low at $91,530.
Related: Bitcoin to $1M by 2028 as Hayes tells Europe to ’get your money out’
Bitcoin price runs into resistance at $106,000
From a technical perspective, Bitcoin’s latest rally was curtailed by a supply congestion zone between $106,000 and the $109,000 all-time high. When the price was rejected from this level on Jan. 31, it recorded a 27% loss to $78,000, suggesting that the bears are aggressively defending this zone.
Bitcoin bulls were required to produce a decisive daily candlestick close above this area to sustain the recovery.
Failure to flip $106,000 into support could cause the price to drop lower, with the accompanying long position liquidations pulling the price toward the year open at $93,000.
Data from CoinGlass showed a wall of ask orders building up above $106,000, reinforcing the importance of this resistance area.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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