Bitcoin price has entered a corrective phase after an impressive upward rally that pushed prices to a new ATH above $122,000. This recent pullback is being viewed by market participants as a natural part of its price cycle, often following extended bullish momentum. Rather than signaling a trend reversal, the consolidation reflects typical market behavior as traders reassess positioning. With strong underlying structure and buying interest at lower levels, the correction appears more like a healthy breather than a sign of weakness.
What’s Behind the Latest Dip?
The BTC price shocked everyone, recording the highest weekly close, followed by a new ATH at the beginning of the week. Meanwhile, the price saw a surge in the bearish pressure soon after marking highs with a drop in bull dominance. Here are a few reasons that caused the latest Bitcoin drop.
- Profit-taking was triggered after the price marked a new ATH, which is a typical pattern after a strong rally
- The long-to-short ratio flipped negative, showing a clear drop in bull dominance as traders started shorting aggressively
- The Fear & Greed Index is hovering around 70, which is a signal that sentiment is greedy and ripe for short-term pullbacks.
Why is this Bitcoin price correction healthy?
After a massive rally, the bulls have drained their strength, which has paved the way for the bears to ramp up their activity. Despite this, the current BTC correction appears to be a healthy one, and here are a few reasons:
- Corrective phases reset overheated signals: Corrections cool off overbought market structures—important for sustaining long-term uptrends.
- On-chain behaviour shows limited profit-taking: Short-term holder SOPR (Spent Output Profit Ratio) remains subdued, implying most investors are not selling, suggesting this is not a capitulation phase.
- Strong institutional and legislative tailwinds: Ongoing U.S. regulatory progress (e.g., GENIUS, CLARITY Acts) and institutional Bitcoin accumulation continue to underpin long-term confidence.
- Macro backdrop remains supportive: Expectations of interest rate cuts later this year and broader investor appetite for crypto-assets continue to favour upside over time.
Here are the Crucial Levels to Monitor
The Bitcoin price witnessed a steep drop over the past few hours, causing a pullback of over 5% from the highs. Meanwhile, the price is trying to find a base around the local support zone between $116,594 and $116,892. The buying pressure has dropped as the selling volume has decreased. As a result, the price is primed to test the crucial support in a short while, which may further trigger a rebound.
The short-term price action shows the price plunging heavily, which has dragged the stochRSI into the oversold range. The levels are preparing for a rebound, and if this materializes, then the price may experience a notable shift. Until then, both the possibility of a rebound to $118,500 or a drop to $115,260 could be in place. These are the crucial levels to monitor, as a rise or drop from these levels could impact the Bitcoin (BTC) price rally accordingly.
