In July 2025, Bitcoin (BTC) experienced a historic moment—its price first broke through $120,000, reaching a peak of $119,943, followed by fluctuations in the $118,000-$120,000 range. This milestone breakthrough marks Bitcoin entering a new price cycle, but market sentiment is polarized: bulls cheer 'the $200,000 target is in sight', while bears warn of 'short-term overbought correction risks'. So, what is the core logic behind this round of increase? How will future trends evolve? How should investors respond?
1. Key driving factors for breaking through $120,000
1. Institutional funds continue to flow in, ETF demand overwhelms supply
The US spot Bitcoin ETF saw a net inflow of over $5 billion in a single week, BlackRock (IBIT) holdings exceeded 700,000 BTC, and Fidelity (FBTC) holdings reached 450,000, with institutional funds accumulating at a rate ten times the new Bitcoin production daily.
Supply-demand imbalance intensifies: The daily new mining volume of Bitcoin is only 450 coins, while the average daily demand from ETFs exceeds 5,000 coins, leading to continued tightening of market liquidity and driving prices to spiral upwards.
2. Global monetary policy shift, funds flowing into anti-inflation assets
The Federal Reserve releases signals of a September rate cut, the US dollar index (DXY) drops to a new low for the year, market liquidity expectations strengthen, and funds accelerate towards Bitcoin and other non-sovereign assets.
Global central banks continue to buy gold + Bitcoin: Countries like China and Russia, while increasing their gold holdings, are also exploring Bitcoin as a reserve asset, further strengthening its 'digital gold' narrative.
3. Regulatory policies becoming clearer, market confidence strengthening
The US Congress will vote this week (on the cryptocurrency regulatory framework bill); if passed, Bitcoin may be officially classified as a 'commodity' rather than a security, eliminating long-term policy uncertainty.
The Trump administration's 'strategic Bitcoin reserve' plan (currently holding 200,000 BTC) further consolidates Bitcoin's status as a 'national reserve asset'.
2. Technical analysis: Is the bull market accelerating or nearing a short-term peak?
1. Weekly level: The ascending channel remains intact, target $150,000
Bitcoin has broken through the 'cup and handle' neckline ($115,000), with a theoretical target pointing to $150,000.
Key support: $110,000 (previous high turned support), if the pullback does not break, the upward trend can still be sustained.
2. Short-term risks: 4-hour level top divergence, beware of pullbacks
RSI (daily) is approaching 75, entering the overbought zone, and a 5%-10% adjustment may occur in the short term (target $110,000-$115,000).
High leverage liquidation risk: $278 million in liquidations in the past 24 hours, with shorts accounting for 68%. If prices fluctuate sharply, it may trigger a chain liquidation.
3. Market outlook: Key nodes and potential catalysts
1. Short term (July-August): Focus on policy implementation and institutional trends
July 22 Federal Reserve rate decision: If clear rate cut signals are released, Bitcoin may hit $130,000.
US cryptocurrency bill vote results: If passed, market sentiment will further heat up; if blocked, it may trigger short-term selling pressure.
2. Medium to long term (Q4-2026): Supply-demand imbalance may drive higher targets
Bitwise prediction: If ETF fund inflows maintain the current pace, Bitcoin could challenge $200,000 by the end of the year.
Halving effect continues to ferment: The supply tightening after the 2024 halving will be further evident in the second half of 2025, potentially pushing prices into a 'super cycle'.
4. Investment advice: How to respond to the current market situation?
✅ Trend traders:
Focus on $110,000 support; if stabilized, can gradually accumulate, target $150,000.
Beware of short-term overbought corrections and avoid chasing prices with high leverage.
⚠️ Short-term speculators:
Observe the 4-hour RSI divergence signal, if it falls below $118,000, it may pull back to $115,000.
Watch the Federal Reserve's policies and ETF fund flow changes, and adjust strategies in a timely manner.
💎 Long-term holders (HODL):
Bitcoin is still in the 'early institutional phase', and may move towards $500,000-$1,000,000 in the future, dollar-cost averaging on dips remains a relatively optimal strategy.
