Bitcoin's recent surge past $120,000 has captured the attention of investors and analysts alike, but resistance at this level is considered normal due to "frothy" open interest near all-time highs. Several factors suggest that this resistance is a natural part of Bitcoin's price discovery process, even as the broader bullish trend remains intact.
After a 19% rally over the past 21 days, Bitcoin printed its first notable bearish signal on the daily chart since early May, forming a bearish engulfing candle confirmed by a shooting star pattern, potentially signaling exhaustion. This development suggests that the market may be experiencing short-term exhaustion after a significant uptrend.
Data from CryptoQuant highlighted that the Miners' Position Index (MPI) surged above 2.78, its highest level since November 2024. The MPI measures how much Bitcoin miners send to exchanges relative to its one-year average. A high reading suggests an increased likelihood of selling, which may add short-term pressure. However, the spike remains well below levels typically seen near bull market tops. Adding to this cautionary outlook, realized profit and loss (P&L) from BTC deposits to centralized exchanges hit an all-time high of $9.29 billion, signaling aggressive profit-taking.
Trading platform Hyblock Capital noted that Bitcoin open interest is "approaching frothy levels". Historically, such conditions, combined with a Fear & Greed Index in "Extreme Greed" territory, have preceded local tops and corrections. These conditions tend to play out over longer timeframes, so traders should avoid rushing into trades.
However, despite the potential for short-term volatility, analysts remain optimistic about Bitcoin's long-term prospects. Crypto analyst Nic Puckrin noted that Bitcoin's surge past the $120,000 mark broke above a seven-year trendline that had acted as a strong resistance level since 2018. Despite a brief dip after reaching an all-time high, driven by short-term profit-taking, long-term holders and miners have continued to hold their positions, indicating a sustained bullish sentiment in the broader market.
Technically, Bitcoin is testing short-term resistance near $119,000, a breakout point from last week's range. Chart watchers note the formation of a reversal pattern with bullish continuation implications. If momentum holds, BTC could retest $120K before the end of the week. A break above $120,000 could invite trend-following inflows. The daily bitcoin chart indicates a bullish breakout from a low of $98,240 toward a peak near $123,236 before consolidating back to the $118,000 level. This suggests that while the primary uptrend remains intact, profit-taking near resistance has led to a temporary pause.
Ultimately, Bitcoin's resistance at $120,000 is a normal part of its price discovery process. While short-term volatility is possible due to "frothy" open interest and profit-taking, the long-term bullish trend remains intact, supported by strong fundamentals and increasing institutional adoption.
