Bitcoin's Struggle to Break $108,500: Two Key Obstacles and Potential Solutions

Bitcoin's price has seen an increase of approximately 2.8% in the last 24 hours, now trading near $92,500. The daily chart reveals a clear inverse head and shoulders pattern aimed at $108,500, yet each attempt to move higher has faced challenges.

Key Takeaways

Bitcoin's price has reached around $92,500 with a recent increase of 2.8%.
The inverse head and shoulders pattern targeting $108,500 remains valid but is facing resistance at $93,700.
Whale activity, with entities holding at least 1,000 BTC scaling back, is hindering the breakout.
A potential short squeeze could lead to a successful price push if Bitcoin can break above the resistance level.

Current Hurdles for Bitcoin's Price Breakout

Despite forming an inverse head and shoulders pattern since November 16, Bitcoin's price has been unable to break the crucial resistance level at $93,700. This level has rejected all clean breakout attempts thus far. Until Bitcoin closes above this threshold, the potential for the pattern to activate remains unrealized.

Chart: Bitcoin’s Bullish Structure

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Another significant factor is the positioning of large holders (whales). Since November 19, these key market players, who each hold at least 1,000 BTC, have been reducing their holdings. The count dropped to a monthly low of 1,303 on December 3 and has stayed near this number since. The lack of confidence from whales contributes to the difficulty in overcoming resistance levels, as this group typically plays a crucial role in confirming significant breakouts.

An example of this was observed between December 2 and December 3 when Bitcoin’s price touched $93,400. During this time, whale holdings dropped from 1,316 to 1,303, resulting in a price correction to $89,300—a decrease of about 4.4%.

Chart: Large Holders Activity

In situations where the price is rising but whales reduce their exposure, the momentum can quickly diminish due to the absence of substantial buyers to back the movement.

These two factors— the resistance level at $93,700 and the cautious approach of whales— are the reasons for the ongoing struggles with the BTC price breakout. However, since these issues are not fundamentally structural, they can be resolved if market conditions change favorably.

Optimism Ahead: How a Short Squeeze Could Propel Bitcoin Higher

Despite the lack of whale support, there is still some optimism regarding a short squeeze setup that could facilitate a breakout for Bitcoin. Currently, the short liquidation leverage on Binance over the past 30 days is around $3.66 billion, contrasted with $2.22 billion for long positions. With shorts nearly 50% higher, this could generate quick pressure if Bitcoin's price can again surpass $93,700.

Chart: Short-Squeeze Setup Ready

This mechanism has been proven effective several times this month, as slight price increases of 1-2% have led to significant rallies triggered by the liquidation of short positions.

Recently, a significant event occurred where Bitcoin broke the $94,400 mark, gaining $4,400 in just two hours. Ethereum (ETH) has also regained $3,350, contributing to a surge of $156 billion in the crypto market within four hours. Moreover, during this timeframe, $254 million worth of shorts were liquidated, indicating a massive short squeeze.

If Bitcoin can achieve a solid daily close above $93,700, the resulting squeeze might provide the strength to push beyond $94,600, which is the next key resistance level. At this juncture, whales may no longer be needed to catalyze the move; growing momentum could independently drive the price higher. Furthermore, as momentum builds, whales might feel more inclined to enter the market.

If Bitcoin successfully crosses $93,700 and $94,600, the path to a breakout toward $105,200 opens up, positioning Bitcoin for a full measured target of $108,500—an increase of about 15.7% from the neckline.

Chart: Bitcoin Price Analysis

It’s important to note that the inverse head and shoulders structure remains valid as long as Bitcoin stays above $83,800. However, if the price drops below $80,500, this structure could be invalidated, leading to the risk of a deeper market pullback, particularly if whale activity continues to decrease.

In summary, the obstacles preventing the breakout are the resistance level and the current hesitation from whales, but both are manageable if buying pressure emerges at $93,700 or if a short squeeze occurs.