Bitcoin Price Hits $116K: Are We Seeing a Bull Trap?

Bitcoin $116K resistance is suggestive of a bear trap.

Bitcoin's price has reached the $116,000 mark, testing a critical resistance area that shows signs of a potential bull trap in the making. With multiple rejections, worries are mounting about the sustainability of this upward move.

Key Takeaways

Bitcoin price reaches $116,000 but faces strong resistance.
There are indications of a possible bull trap, particularly with current momentum stalling.
A failure to hold above the Point of Control (POC) could lead to a drop towards $106,000.
Traders are advised to exercise caution; bullish trends remain uncertain without strong volume support.

Current Market Conditions

Bitcoin Bitcoin has climbed to $116,000, an important resistance zone that has drawn attention from traders and investors alike. This zone represents a convergence of key technical indicators and has sparked excitement about the cryptocurrency's future. However, caution is warranted as recent developments suggest we might be dealing with a bull trap. This has been compounded by Germany’s AfD party proposing the establishment of a strategic Bitcoin reserve, further igniting speculative interest.

Technical Analysis of Bitcoin Price

Bitcoin price hit $116k but warning signs suggest a bull trap in play - 1
BTCUSDT (4H) Chart, Source: TradingView

From a technical perspective, Bitcoin’s journey towards the $116,000 level has seen several rejections in shorter timeframes. This indicates that bullish momentum is losing steam. The area acts as a strong technical resistance zone, with sellers actively defending this price range.

Recently, Bitcoin has seen a slight correction, dropping back below the value area high and nearing the Point of Control (POC). The POC is a significant volume-based level that typically serves as the mid-range equilibrium. It's essential for bulls to maintain price levels above the POC; a drop below could heighten the chances of a bull trap, leading to a deeper correction toward the $106,000 support zone.

The $106,000 area coincides with the value area low (VAL), creating a substantial structural demand zone. If Bitcoin were to lose the POC, selling pressure could intensify, further supporting the bear trap narrative that is forming at $116,000.

Future Price Expectations

Overall, the broader market context appears cautiously bullish but is increasingly exposed to risks. As long as Bitcoin remains below the $116,000 resistance cluster, its upward momentum may continue to wane. The likelihood of a bull trap becomes more evident if trading volume diminishes while the price attempts to retest $116,000 without success.

On the other hand, if Bitcoin can decisively reclaim the $116K mark with strong trading volume, this could invalidate the bearish outlook and potentially lead to further bullish movements towards $124,000. Until such confirmation is achieved, traders are advised to navigate this resistance zone carefully, as current technical indicators suggest a likely correction in the near term.

If Bitcoin fails to maintain the Point of Control, we could quickly see the price shift down toward the $106,000 support level, establishing a more extended range-bound trading phase between $106,000 and $116,000. This scenario would require traders to reassess their directional bias, leading to prolonged periods of consolidation.