Bitcoin has dropped by 2.7% over the past 24 hours, currently trading at approximately $105,150. The decline comes after the world’s largest cryptocurrency faced resistance above the $111,000 level, with key technical and market indicators signalling a temporary slowdown in bullish momentum.
Waning Demand Signals a Rally Pause
The recent price dip is primarily attributed to a decrease in investor demand following Bitcoin’s surge to all-time highs earlier this week. Market intelligence platform CryptoQuant highlighted in its latest report that Bitcoin’s 30-day demand growth peaked at 229,000 BTC on May 28, nearing the previous high of 279,000 BTC recorded in December 2024. Such spikes often coincide with market tops and subsequent corrections.
Additionally, spot Bitcoin ETFs saw a significant reversal. On May 29, outflows totalled $358.65 million, marking the end of a 10-day inflow streak. The outflow indicates shifting interest from institutional investors and adds to the current selling pressure.
Whale Activity Suggests Accumulation Slowdown
Large investors, often referred to as “whales,” have also shown signs of caution. Over the past month, whale wallet balances increased by just 2.8%, a growth rate that historically precedes a reduction in large-scale accumulation. This moderation further supports the view that Bitcoin may be entering a short-term consolidation phase.
Liquidations Intensify the Sell-Off
Bitcoin’s fall on May 29 triggered over $211 million in long position liquidations, compared to just $10.8 million in shorts. Within the last 12 hours alone, $114 million worth of long positions were wiped out. Across the crypto market, over $680 million in leveraged positions were liquidated during the past 24 hours.
This trend mirrors a similar episode from early April, when $280 million in long positions were liquidated over two days, resulting in an 8.5% price correction. The liquidation cascade suggests many bullish traders were forced to close their positions, reinforcing the bearish sentiment.
Bearish Divergence Weakens Uptrend Momentum
From a technical perspective, Bitcoin’s recent price behaviour reveals a growing divergence between its price and the relative strength index (RSI). While BTC/USD formed higher lows from May 5 to May 28, the daily RSI declined from 76 to 54. This divergence often signals a weakening uptrend, suggesting that upward momentum is losing strength.
Crypto analyst Willy Woo pointed out that a similar divergence is also visible on the weekly chart. He cautioned that unless Bitcoin regains strength in the coming days, prices could face further declines before the next potential rally.
Resistance Zone Limits Upside Potential
Bitcoin’s efforts to climb above $111,000 have been thwarted by a strong resistance zone between $106,000 and the recent all-time highs. This “supplier congestion zone” is acting as a ceiling, preventing further price advances. Unless demand returns and breaks this barrier, Bitcoin is likely to consolidate around the current level.
Despite the current correction, analysts suggest that Bitcoin may be undergoing a “healthy pause,” potentially setting the stage for a future rally. Projections indicate that if support holds, a new bullish leg could eventually target levels between $220,000 and $330,000.
