FameEX Hot Topics | Bitcoin Traders Shift Focus to Downside Liquidity After Key Supports Fail: Will $107K Follow?

Bitcoin (BTC) recently dropped below $111,500 during the Asian market session on Monday, triggering a wave of liquidations in leveraged long positions. This dip cleared out internal liquidity between $115,000 and $114,000, and Bitcoin tested a crucial demand zone between $110,700 and $113,200. As the price continues to hover around these levels, the cryptocurrency faces the risk of losing support from the 50-day exponential moving average (EMA) if the daily candle closes beneath $113,200. The recent market behavior has brought into focus whether Bitcoin can find a sustainable rebound or if it will face a deeper correction.

A brief rally earlier in the week, spurred by the Federal Reserve’s interest rate cut, briefly lifted Bitcoin’s price to $117,500. However, the rally lacked the momentum necessary to break the key resistance structure, and the price failed to maintain upward momentum. As a result, Bitcoin is now experiencing a pullback. Despite this downside movement, the broader market structure remains relatively constructive, with many indicators suggesting that the market could be preparing for a continuation. CryptoQuant data revealed that investors were buying aggressively into the dip, with the Bitcoin Premium Index showing strong positive sentiment, indicating that U.S. spot demand is acting as a cushion against further downside pressure.

On-chain data from Bitcoin researcher Axel Adler Jr. reinforces this view, showing consistent spot demand over the past month. A total of 95,800 BTC has been accumulated during this period, which is helping keep Bitcoin’s price near the upper band of its recent trading range. This indicates that while futures markets are showing short-term weakness, spot market accumulation continues to provide support for Bitcoin. The liquidation of approximately $280 million in BTC futures positions during the correction has helped reset the excessive leverage that had built up during Bitcoin’s climb from $107,000 to $117,500 in September. This leverage flush could lead to a healthier market environment, especially if spot demand remains strong.

Bitcoin is currently trading just under $113,000, and there are three critical price levels to watch from a trend perspective. The first level is the demand zone between $110,700 and $113,200. If Bitcoin experiences a sharp rebound from this zone, it would confirm that the recent dip was merely a liquidation event, clearing out excess speculative positions. Crypto analyst Dom noted that one of the largest long liquidations in recent months occurred, which could reset the market and pave the way for a cleaner, more sustainable move higher. A strong recovery from this area could push Bitcoin back above $117,000 in the short term.

However, if the recovery proves slow, Bitcoin may continue to drift toward external liquidity or find support around $107,200. This level remains significant, with more than $3 billion in long positions exposed at this price point, creating the possibility of a deeper liquidity grab before any bullish reversal. Supporting this downside risk, Glassnode data highlighted that the short-term holder cost basis is near $111,400. If Bitcoin sustains trading below this "battle line" between bulls and bears, it could signal a transition toward a mid- to long-term bearish market structure. The next few days will be critical in determining whether Bitcoin can maintain its bullish momentum or if a deeper breakdown is on the horizon.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.