Bitcoin has struggled to gain strong growth momentum since reaching the old historical peak of around $123,800 in mid-July. Although this leading cryptocurrency has established a new peak around $124,120, the market seems to lack the momentum to sustain a prolonged price increase.

Strong Selling Pressure and Recovery from Fed Policy Signals

In the past week, Bitcoin faced significant selling pressure, even dropping below the $112,000 mark on August 21. However, the market reacted positively after the speech of U.S. Federal Reserve Chairman Jerome Powell on August 22, helping BTC's price recover.

The $118,000 Threshold - The Key to a New Uptrend

According to an analysis by on-chain expert Ali Martinez posted on platform X (formerly Twitter) on August 23, the price level of $118,000 is currently considered the most important factor determining the next direction of Bitcoin. Martinez emphasized that BTC needs to quickly reclaim this price level to return to a growth trajectory.

The technical indicator he mentioned is Glassnode's MVRV Momentum - a tool used to identify macro trends in the market. MVRV Momentum is composed of the MVRV ratio and the 70-day simple moving average (SMA).

  • When the MVRV ratio rises above the 70-day SMA, it usually indicates that the market is entering a strong growth phase, as most investors are holding profits.

  • Conversely, when the MVRV falls below the 70-day SMA, it implies a downward trend, as many investors are at a loss compared to their entry price.

Currently, according to Martinez, the 70-day SMA is around the $118,000 region. MVRV breaking back above this level will be a strong signal indicating the return of a long-term upward trend.

Current Bitcoin Price Situation

At the time of writing, the price of Bitcoin fluctuates around $116,217, up more than 2% in the last 24 hours but still down over 1% compared to last week. This movement indicates that BTC is in a state of 'hesitation' and could explode in either direction in the near future.

Conclusion

The $118,000 threshold is not only a significant technical level but also carries great psychological weight in the market. If Bitcoin can surpass and maintain above this level, we are likely to witness a new wave of growth. Conversely, failure to reclaim this price range could lead to increased downward pressure and cause the market to enter a deeper correction phase.