Despite Bitcoin's recent recovery above the $120,000 mark, the cryptocurrency has struggled to fully overcome bearish pressures. This situation appears to signal the onset of a potential price correction that could lead to a significant downturn. Additionally, there are several fair value gaps (FVGs) that remain unaddressed, indicating that the upward trend may experience a temporary halt before continuing.
According to crypto analyst TehThomas, the current price action of Bitcoin indicates that it has approached a crucial rejection zone around the $122,000 level, which explains the observed resistance at this point. This analysis suggests that market exhaustion may be setting in, as more sellers seem to be taking profits while buyers are retreating, resulting in insufficient demand to counterbalance the increased supply entering the market. If this trend persists, it could lead to a transition into bearish territory.
Furthermore, the confluence of the rejection zone with the 4-hour charts highlights a significant area of resistance for sellers. As the price closes within this critical zone, it reinforces the likelihood of a reversal trend, potentially prompting a more substantial retracement.
Currently, there is a fair value gap above $112,000 that has yet to be filled, making it a primary target in the event of a price correction. Historically, such gaps are often addressed before the continuation of bullish momentum, suggesting a high probability of retracement to this level.
Moreover, Bitcoin's recent movement through a cluster of liquidity above its recent highs has created a trap for late buyers and long positions, leading to a wave of liquidations as the price declined again. Should this bearish scenario materialize, analysts predict that Bitcoin's price could dip as low as $110,000 to fill these gaps. However, completing this downward move could set the stage for a subsequent upward surge toward previous highs.
