Bitcoin has returned to a critical technical level that has historically separated major bullish runs from sharp corrections.
The 50-week simple moving average (SMA) — often referred to as the “backbone of the bull market” — is once again the line everyone is watching.
The Line That Defines Trends
According to analyst Merlijn The Trader, every time Bitcoin has retested the 50-week SMA since 2023, it has triggered a new rally.
Conversely, a breakdown below this line in 2022 marked the beginning of a broad correction.
Since then, BTC has repeatedly bounced from this support — and now, traders are watching closely to see if history will repeat itself.
At the time of writing, Bitcoin trades at $107,950, after a volatile week of declines and uncertainty.
Sentiment Still Shaky After Liquidations
The major liquidation event on October 10 continues to weigh on market sentiment.
Funding rates — reflecting the cost of holding long or short futures positions — turned negative on October 17, showing that most traders were betting on further downside.
Although funding rates have since recovered above 0.005, the overall market mood remains cautious and hesitant — typical behavior following a sharp sell-off.
Key Levels to Watch
Bitcoin is currently testing resistance at $111,440, the level that triggered the previous drop below $108,600.
According to analyst Lennaert Snyder, a breakout and close above that line could open the path to $115,800, or even $120,800, where heavy selling pressure emerged earlier.
Conversely, failure to hold the current support could send BTC back toward $107,200, a zone the market narrowly defended last week.
Meanwhile, Bitcoin’s liquidity index is rising for the first time since July, hinting that fresh capital may be re-entering the market.
Macro Pressures and Cyclical Patterns
Analyst EGRAG CRYPTO believes Bitcoin is following a repeating cyclical pattern, often seen near the end of bullish phases.
The growing participation of retail investors could signal that the market is entering the final stage of its current uptrend — just before a major reversal.
“Everyone will think we’re finally safe... and that’s when the real twist comes,”
EGRAG noted, referring to the typical pre-reversal market psychology.
Political headlines have also fueled volatility — Donald Trump’s new tariff threats against China last week caused uncertainty across financial markets, spilling over into crypto.
The Turning Point: Bullish Breakout or Bull Trap?
Bitcoin now stands at a decisive crossroads.
If the 50-week SMA holds once again, it could mark the beginning of a new bullish wave.
But if it fails, the market could slide into a deeper correction — or even the start of a new bear cycle.
For now, the big question remains: is this the start of a fresh bull run, or just a cleverly disguised bull trap?
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