Key takeaway:
Bitcoin (BTC) reached a weekly high of $110,653 on Monday, but it is currently down 3.5%, dropping to a low of $106,600 on Thursday. Escalating tensions between Iran and Israel, with reports of Israel possibly preparing military action against Iran, have triggered a risk-off sentiment, with BTC posting a reaction.
From a technical standpoint, the current BTC correction looks routine. BTC prices jumped roughly 10% between June 6 and Tuesday, and a 3.5% dip can be considered normal. Bitcoin researcher Axel Adler Jr outlined a similar sentiment, explaining that the current market faces a “soft reversal point.”
Using the Bitcoin futures position dominance chart, the analyst explained that the price dip is potentially due to long positions taking profits at resistance, which is supported by aggressive short volume. Adler Jr said,
“This is a classic “soft reversal point” after an uptrend: as long as funding remains positive but open interest is declining, you should expect a short-term correction or consolidation below $108K.”
While a consolidation near $108,000 should not break bullish momentum, fractal analysis outlines the possibility of a deeper drawdown.
Related: Bitcoin adoption fueled by ‘deglobalization,’ Trump’s ‘big, beautiful bill’
Is Bitcoin falling into a bull trap?
Bitcoin’s recent rally to $110,000 from $100,500 represents a similar setup from January 2025, when BTC prices rebounded to $102,700 from $91,700. The current observation reveals a compelling fractal pattern with potentially bearish implications. A fractal pattern is a repeating trend that could lead to similar price action due to identical market conditions. As illustrated in the chart, the pattern can be summarised in three similar signals:
- BTC price broke a descending trendline pattern after absorbing 3-4 weeks of trailing liquidity, and formed a bullish break of structure on the daily chart.
- BTC failed to take the previous high, which, in both cases, was the all-time high level.
- The relative strength index slipped below 50 before recovering and hit a rejection at 60.
Bitcoin could face a sharp rejection if this fractal holds, potentially plummeting to $100,000, where significant support lies, as indicated by the chart’s liquidity zone. Validation of this fractal analysis requires the price to continue declining below Monday’s lows of approximately $105,000.
This raises the concern of a potential bull trap for BTC, where the crypto asset could signal the beginning of a multi-week drawdown. Invalidation would occur if Bitcoin reclaims and sustains above $108,000, negating the failed high and suggesting a bullish continuation.
Related: Bitcoin bulls halt $4K BTC price dip as US dollar hits new 3-year lows
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
