Bitcoin Bull Run Over? BTC Drops to $111K This Week

Bitcoin starts the final week of August far from all-time highs as traders grow increasingly nervous about market direction. A massive long liquidation event brought $110,000 back into focus while a new CME gap offers hope for bulls seeking recovery.

BTC Price Weakness Triggers $100K Retest Discussion

Bitcoin returned to multi-week lows as August nears its end, with market participants actively drawing new price targets. Data shows whipsaw price action has defined the market since Sunday's flash volatility event.

The sudden move took BTC/USD to $110,700, marking its lowest levels since July 10 and serving as a harsh reminder for overleveraged positions. Twenty-four hour crypto long liquidations reached $640 million, highlighting the severity of the market correction.

Traders remain split on short-term outlook. While some anticipate a retest of previous all-time highs as a potential bounce point, others see a more complex technical situation developing.

CME Gap Analysis Points to Potential Recovery

One trader highlighted an important retest currently in progress, noting that Bitcoin opened with a large CME gap - the largest seen in several weeks. Historical data suggests these gaps typically fill within Monday or Tuesday sessions, potentially offering bullish opportunities.

However, bearish voices warn of further downside potential. Exchange order-book data revealed limited bid support below current price levels heading into the week's first Wall Street trading session.

Whale Distribution Activity Intensifies

Sunday's sudden Bitcoin price decline brought whale activity back into sharp focus. Current levels, still within 10% of all-time highs, have proven attractive to large players seeking profit realization on long-held positions.

Massive BTC to ETH Rotation Observed

The weekend witnessed one entity selling a significant Bitcoin tranche after seven years of holding, causing a $4,000 market drop within minutes. Analysis revealed this entity rotating from Bitcoin into Ethereum, depositing approximately 22,769 BTC worth $2.59 billion for sale while purchasing 472,920 ETH worth $2.22 billion.

The entity's remaining BTC holdings are now valued at around $11.4 billion, representing a profit margin of 1,675% from their original investment.

Bitcoin OG Whales Drive Market Dynamics

Statistical analysis reveals that Bitcoin supply remains concentrated among original whales who peaked their holdings in 2011. These early adopters purchased Bitcoin at $10 or lower, meaning it requires over $110,000 of new capital to absorb each Bitcoin they sell.

This concentration explains why Bitcoin moves up slowly during this cycle compared to previous market runs. As of Sunday, 2,000 addresses held between 1,000 and 10,000 BTC, marking a new August high for this whale category.

Smaller Bitcoin Holders Continue Accumulating

While whale distribution dominates headlines, onchain analytics reveal a different story among smaller holder cohorts. Distribution is not yet widespread across the entire Bitcoin investor spectrum.

Wallet Size Analysis Reveals Mixed Signals

Analysis shows distinct behavioral patterns across different wallet sizes:

Small Holders (Up to 10 BTC): Continue accumulating, maintaining overall bullish sentiment despite price weakness.

Medium Holders (10-100 BTC): Display distribution behavior, shifting to profit-taking as price approached $118,000.

Large Holders (100-1,000 BTC): Show balance between accumulation and distribution since $105,000, reflecting market indecision.

The $105,000 level stands out as a critical support zone. A move down to this region could create significant market stress and trigger widespread fear among investors.

Technical Analysis Suggests Bull Market End

Some market participants see little reason to expect a full Bitcoin bull market return. Conservative analysts have doubled down on bearish outlooks as BTC/USD reached its lowest levels since early July.

Head and Shoulders Pattern Formation

Technical analysis points to a head and shoulders reversal pattern playing out, with declining volume and weakening Relative Strength Index data supporting the thesis that Bitcoin has lost momentum. As price made new highs, RSI created lower highs - a classic bearish divergence setup.

Using Wyckoff analysis methodology, some traders project potential downside targets for BTC/USD at $95,000, suggesting further correction may be necessary before any sustained recovery begins.

Federal Reserve Inflation Data Looms Large

The Federal Reserve's preferred inflation gauge faces release at a critical time for economic policy. The July Personal Consumption Expenditures Index, due Friday, will significantly impact both Fed officials and markets seeking confirmation of interest rate cuts next month.

Rate Cut Expectations Remain High

Following Fed Chair Jerome Powell's surprise dovish pivot at the Jackson Hole symposium, risk assets initially surged as rate cut hopes gained momentum. However, market sentiment has since cooled with substantial inflation data still pending before September's rate decision.

Current market odds place a 0.25% rate cut probability at nearly 90% according to CME Group's FedWatch Tool. However, analysts warn that betting on multiple rate cuts might be misplaced as a forward strategy.

Nvidia Earnings Add Market Volatility

Wednesday's Nvidia earnings report may inject additional volatility into crypto and risk assets, with strong performance expected. The earnings announcement comes as attention shifts toward Federal Reserve policy decisions and their impact on risk asset valuations.

Market Outlook and Key Levels to Watch

Bitcoin's current technical setup presents both opportunities and risks for traders and investors. The $105,000 level emerges as the most critical support zone, with potential for significant market stress if breached.

While whale distribution continues, smaller holders maintain accumulation patterns, suggesting underlying demand remains intact despite current price weakness. The outcome of this week's Federal Reserve inflation data and upcoming rate decisions will likely determine Bitcoin's near-term trajectory.

Market participants should monitor CME gap fills, whale distribution patterns, and macroeconomic developments as key indicators for potential price direction changes in the coming weeks.

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