Bitcoin's summer rally is losing steam. After hitting a high of $87,000, the cryptocurrency has now pulled back to around $80,000, with substantial potential selling pressure building along the path toward $100,000.
According to prediction market Polymarket, the probability of Bitcoin reaching $100,000 within the year is only 17%, while the chance of breaking above $110,000 is even lower at just 9%.
Analysts at Glassnode point out that trapped positions above $87,000 are hindering price appreciation. Each time Bitcoin encounters this selling pressure, its price subsequently tends to experience a decline of 25% or even more.
Macro factors cannot be overlooked either. Inflation data and geopolitical tensions surrounding Iran have both disturbed Bitcoin's price. In mid-October, the correlation between Bitcoin and US stocks rose to its highest level since the end of May, demonstrating this asset's high sensitivity to global macroeconomic market fluctuations.
As of press time, Bitcoin was up 0.87% on Tuesday, trading at $80,700.
Trapped Positions Become Key Resistance
The core reason for this rally's setback lies in investors continuously "selling into strength."
Researchers at on-chain data analysis firm Glassnode note that investors who bought Bitcoin over the past two years have their holding costs roughly concentrated at $87,000 and above. These investors chose to exit at break-even or lock in profits after prices touched this zone, having already killed Bitcoin's upward momentum here twice this year.
Glassnode researchers further point out that each time Bitcoin encounters this selling pressure, its price subsequently tends to experience a decline of 25% or even more, indicating that the selling pressure near this price level is quite intense and systematic rather than a short-term disturbance.
The technical resistance formed at this price level, combined with deleveraging pressure, further amplified the decline. Thomas Probst, a research analyst at Kaiko, noted that during Bitcoin's recent downward movement, forced liquidation of leveraged long positions intensified the price drop.
Rising Macro Correlation Increases Volatility Risk
Beyond technical resistance, Bitcoin's growing correlation with traditional financial markets has further suppressed its room for independent gains. Bitcoin's correlation with the stock market rose to its highest level since the end of May in mid-October, meaning that once global risk assets face selling, Bitcoin will find it difficult to remain unaffected.
Lacie Zhang, a research analyst at Bitget Wallet, noted that "if stocks rebound, it could provide some short-term support for Bitcoin, as Bitcoin remains sensitive to overall risk appetite."
Inflation data beating expectations and the back-and-forth nature of geopolitical situations have become important variables affecting Bitcoin's short-term price movements. This stands in clear contrast to the narrative held by some investors that Bitcoin serves as "digital gold" capable of hedging macro risks, and also makes bullish strategies that attempt to rely on macro tailwinds to drive price action harder to succeed.
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