Bitcoin Shows Signs of Cooling Down After Big Rally
Bitcoin recently showed its first major bearish signal on the daily chart since early May. This comes after Bitcoin jumped 19% in the past 21 days, which may suggest it's starting to lose momentum. A bearish engulfing candle followed by a “shooting star” pattern is a technical sign that a short-term drop could be coming.
According to data from CryptoQuant, the Miners’ Position Index (MPI) rose to 2.78 — the highest level since November 2024. This means Bitcoin miners are sending more BTC to exchanges, which often leads to selling. While this could add short-term pressure, it’s still far from levels that signal the end of a bull market.
Another warning sign is that profits from Bitcoin deposits on exchanges hit a record $9.29 billion. This shows many investors are taking profits quickly. Analyst Crazzyblockk warned that this creates a “high-risk” zone with possible short-term price swings, even though the long-term trend remains strong.
Hyblock Capital also noted that Bitcoin's open interest (a measure of active trading contracts) is getting “frothy,” which often happens when the market becomes too greedy. Historically, when this happens along with an "Extreme Greed" reading on the Fear & Greed Index, it leads to a correction or local top.
Should Bitcoin Holders Be Worried?
Bitcoin's recent drop caused some panic. Around 50,000 BTC were sold at a loss in just one day, according to researcher Axel Adler Jr. This shows how nervous some investors are after prices slipped from recent highs.
But despite the panic, many investors saw this dip as a buying opportunity. A heatmap of Bitcoin’s cost basis shows that over 196,600 BTC (worth more than $23 billion) were bought between $116,000 and $118,000. This indicates strong confidence in Bitcoin’s long-term future.
What’s Next for Bitcoin?
From a technical point of view, Bitcoin is still in a healthy uptrend as long as it stays above $112,000. After a big rally, a pause or small pullback is normal. It helps the market cool down, reduce risky bets, and remove weak holders.
While the recent bearish chart pattern could mean a short-term slowdown or correction, it doesn’t break the overall upward trend. If Bitcoin stays above the $112,000 support level, there's a good chance it will continue rising over time.
