Bitcoin Hovers Above $108,000, but Analysts Warn of Potential Drop

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Bitcoin (BTC) continues to trade just above the critical $108,000 support level, maintaining a fragile balance amid growing caution from market analysts. While the price stability offers a brief pause in recent volatility, experts warn that a breakdown below this key threshold could trigger a wave of liquidations and reignite downward pressure. Despite strong long-term conviction among institutional investors, short-term signals suggest increased risk, making this a pivotal moment for traders navigating the current market cycle.

Why the $108,000 Support Level Matters

The $108,000 mark has emerged as a crucial psychological and technical support zone for Bitcoin. After briefly dipping below this level last Saturday, BTC quickly recovered and has since held steady—closing each day above the threshold. However, this resilience may be masking deeper vulnerabilities.

According to data from CoinGlass, over $158 million in long positions were liquidated** on Friday alone, highlighting the fragility of leveraged bets in the derivatives market. A drop below $108,000 could act as a liquidity sweep**, triggering further forced sell-offs and amplifying downward momentum.

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Analysts at Bitunix advise traders to remain cautious, particularly when considering long positions between $109,000 and $112,000. In a recent note, they emphasized:

“Short-term attention should be paid to the effect of support at $108,500–$109,000, and it is not recommended to chase higher. We advise observing whether the $110,800–$112,000 pressure band is effectively broken before considering further positions. A drop below $108,000 could trigger a new round of liquidations.”

Risk management is paramount, especially as capital inflows into Bitcoin spot ETFs show signs of slowing.

Institutional Demand Shows Signs of Cooling

While corporate treasuries and major institutions continue to accumulate Bitcoin, the pace of investment through regulated vehicles like spot ETFs has decelerated. Data from Farside Investors reveals that inflows into spot Bitcoin ETFs have declined since May 22, suggesting a temporary pause in institutional appetite.

This slowdown doesn’t necessarily signal bearish sentiment. Instead, it may reflect market digestion after a rapid run-up toward all-time highs. Gadi Chait, Head of Investments at Xapo Bank, notes:

“Bitcoin has spent the past week catching its breath just below its all-time high, trading around $109,000 as powerful forces pull the market in different directions. On one side, institutional investors continue pouring money into Bitcoin ETFs and corporate treasuries. Yet, geopolitical tensions and policy uncertainty create significant background noise, keeping some investors cautious.”

Notably, high-profile political and corporate endorsements—such as reports of a major U.S. political figure’s company planning to raise $2.5 billion for a Bitcoin treasury—underscore growing mainstream acceptance. These developments reinforce long-term confidence even as short-term volatility persists.

On-Chain Data Suggests Cycle Top Is Not Imminent

One of the most reliable indicators for identifying market tops is the Net Realized Profit/Loss metric from BGeometrics. This on-chain signal measures whether investors are locking in profits across the network.

Historically, sharp spikes in realized profits have coincided with the end of bull cycles—such as those seen in 2018, 2021, and 2022. However, current readings show only modest profit-taking activity, with small positive spikes indicating that most holders are not exiting their positions en masse.

This subdued behavior suggests that the current rally still has room to grow. If large-scale selling were imminent, we would expect to see a surge in realized gains—but so far, that signal remains absent.

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Can Bitcoin Re-Test Its All-Time High?

Bitcoin is currently trading within 3% of its all-time high of $111,980**, making a retest increasingly plausible. A decisive daily candlestick close above this level could open the door to further upside, potentially targeting the **127.2% Fibonacci extension at $122,172—a 12% rally from current levels.

To reach this target, BTC would need sustained buying pressure and renewed institutional inflows. Technical indicators offer mixed signals:

Key support zones remain critical:

As long as Bitcoin holds above $108,000, the path to new highs remains open. A break below could shift sentiment sharply bearish.

FAQ: Understanding Bitcoin’s Current Market Phase

Q: Why is $108,000 such an important level for Bitcoin?
A: It acts as both a psychological floor and a technical support zone. A sustained break below could trigger cascading liquidations in leveraged markets.

Q: Are we near the top of the Bitcoin cycle?
A: Not necessarily. On-chain data shows limited profit-taking compared to previous cycle peaks, suggesting many investors are still holding.

Q: What would confirm a move toward new all-time highs?
A: A daily close above $111,980 followed by strong volume and renewed ETF inflows would increase the likelihood of a breakout.

Q: How much further could Bitcoin rise if it breaks out?
A: The next major target is the 127.2% Fibonacci extension at $122,172—roughly 12% above current prices.

Q: What tools should traders use to monitor risk right now?
A: Focus on liquidation heatmaps, on-chain profit/loss metrics, and ETF flow data to gauge institutional sentiment and leverage risks.

Q: Is retail or institutional demand driving Bitcoin now?
A: Both are active, but institutional participation via ETFs and corporate treasuries is providing foundational support even during pullbacks.

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With over 98% of Bitcoin wallet addresses currently in profit (per IntoTheBlock), the network reflects broad-based confidence. Yet high profitability also increases vulnerability to sell-offs if sentiment shifts.

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In summary, while Bitcoin remains in a technically fragile position near $108,000, fundamental and on-chain indicators suggest the bull cycle is not yet exhausted. Traders should balance opportunity with caution—monitoring key resistance zones, ETF flows, and on-chain behavior to navigate what could be a decisive phase in 2025’s crypto narrative.