Bitcoin has broken back below $116K, losing the 50-day moving average after a sharp rejection from $123K last week. That rejection left a long upper wick – a classic signal of exhaustion – and price has since rolled over on rising volume.
The key level to watch now is $112K. That was the prior resistance zone before the breakout in July, and it should act as strong support on a retest. A breakdown below $112K would open the door to a much deeper correction, potentially into the $100K area, which also lines up with the longer-term trendline and previous consolidation zone.
RSI has been trending down while price pushed higher, creating bearish divergence. That divergence is now playing out as momentum weakens. A reset closer to oversold territory could provide fuel for the next leg higher, but for now, bulls need to see a bounce quickly to avoid losing control of the structure.
The broader trend is still bullish – higher highs and higher lows remain intact – but short-term caution is warranted. Holding $112K keeps the bull case clean. Losing it would confirm that the local top is in.