Bitcoin Rally to $120K: Traders Drop Bearish Bets

Key Market Indicators Signal Bullish Momentum

Bitcoin has been trading within a tight $107,300 to $110,600 range since Wednesday, with market participants increasingly confident about the potential for a sudden price rally. Fresh liquidity injections by major central banks could serve as a catalyst for a Bitcoin bull run.

Central Bank Liquidity Could Drive Bitcoin Higher

Market analyst TedPillows pointed out that Bitcoin has lagged behind the global monetary supply chart. If the historical correlation between the two remains intact, Bitcoin may be positioned for significant gains. The analyst argued that delays in US import tariff deadlines create a "green signal" for Bitcoin to reach $120,000.

US Trade Policy Developments Support Bitcoin

US Treasury Secretary Scott Bessent announced that import tariffs will increase on August 11 for countries that haven't reached an agreement with President Donald Trump's administration. Initially, the administration had set Wednesday as the deadline for negotiations, so investors welcomed the extension as a sign of progress in avoiding a trade war.

Derivatives Data Shows Shifting Sentiment

On Saturday, demand for put (sell) options on Deribit surged, pushing the put-to-call ratio to its highest level in over a year. While this unusual activity reflected heightened demand for downside protection, the effect appears to have faded. By Monday, the indicator had reverted to 0.8, favoring call (buy) options.

Futures Premium Indicates Reduced Bearish Pressure

Bitcoin futures premium data supports the notion of increased bearish sentiment over the weekend, as the BTC futures premium dipped to 3.5% on Saturday, down from 4.5% on Friday. However, by Monday, the premium rose above the 5% neutral mark, even though BTC traded below $108,000.

In neutral conditions, monthly contracts usually trade at a 5% to 10% premium to spot prices, compensating for the longer settlement period. A spike in short (sell) demand tends to drive that premium below 5%.

Market Resilience Despite Recession Concerns

Bitcoin derivatives metrics may not yet signal bullish momentum, but the sharp spike in demand for downside protection seems to have passed. This shift suggests renewed investor confidence, particularly notable given the S&P 500 index dropped 0.9% on Monday.

Trade Tensions Boost Bitcoin's Safe Haven Appeal

Concerns over economic recession deepened after Trump announced a 25% tariff hike on imports from Japan and South Korea. In response, the yield on the US 10-year Treasury note climbed to its highest level in two weeks, as investors demanded greater returns for holding government debt.

The trade-related tensions prompted a broader shift toward risk aversion. Still, Bitcoin's ability to remain above $107,000, coupled with improved derivatives indicators, reinforces the case for a rally to $120,000.

Path to $120,000 Depends on Perception Shift

Whether Bitcoin reaches the predicted $120,000 target will depend on a broader change in investor perception, from viewing Bitcoin as a risk-on asset to embracing it as a hedge and an alternative financial system.

The combination of reduced bearish positioning, improved derivatives metrics, and potential central bank liquidity injections creates a favorable environment for Bitcoin's next major price movement.

Technical Analysis Summary

Current trading range: $107,300 to $110,600 Key resistance level: $120,000 Support level: $107,000 Futures premium: Above 5% neutral threshold Put-to-call ratio: 0.8 (favoring calls)

Bitcoin's ability to maintain above $107,000 while showing improved derivatives indicators suggests the market is positioning for a potential breakout toward the $120,000 target level.