Bitcoin Recovery Deepens as Liquidity Coils for $120K Target

Liquidity Compression Sets Stage for Next Bitcoin Rally

Bitcoin (BTC) has continued to stabilize following a volatile beginning to the month, indicating that it is recovering across key time frames. The asset is establishing support at the level of $110,000, as momentum indicators have started rising to the positive side. Provided that accumulation persists, BTC could attempt to break out to $120,000 in the coming sessions.

On the daily chart, BTC is recovering following sharp drops from the $125,000 zone. Support has held firm at $107,500, a price that has several times cushioned previous pullbacks. The token is currently trading close to the range of $110,260, with higher lows and weakening bearish pressure. 

BTCUSD 1D CHART | SOURCE: TradingView

Moreover, the MACD line is nearing a bullish crossover, whereas RSI is close to 45, which indicates that buying pressure is regaining strength. A strong upward push above $112,500 could verify the reversal and lead to the $117,000-$122,000 zone. However, any decline below $108,000 could halt the recovery, triggering a retest of the $105,000 level.

According to data from the order book provided by analyst Ted, the relationship between whales and retail traders is strained in the short term. Whales continue to sell at the levels of about $111,000-$111,500 with the intention to curb an upward trend. Concurrently, retail traders are buying aggressively on the downside, which is an indication of optimism amidst low volatility. Cumulative Volume Delta readings show a divergence, institutional sell pressure versus retail buy activity.

BTCUSD 5.M | SOURCE: X

Historically, such setups precede large breakouts once liquidity thins and one side yields. As long as the $109,260 support remains intact, upward continuation remains probable.

According to Data provided by Daan Crypto Trades, Bitcoin is coiling in a narrow liquidity range of $106,000-$115,000. Both long and short liquidations are thickening, demonstrating that leveraged traders are heavily positioned for a breakout. Any move above $115K could lead to a short squeeze and a swift upside move. On the other hand, a fall below $106K could result in long liquidations. This compression phase often leads to explosive moves as volatility re-enters the market.

Bitcoin Liquidity Heatmap | Source: X

Bitcoin Calm Sparks Renewed Optimism in Crypto

Sentiment in crypto markets has improved due to new investments into key assets. The stability of Bitcoin has increased risk appetite, allowing altcoins to recover modestly. In addition, the continuous on-chain activity and exchange outflows indicate that investors are moving towards accumulation.

Nevertheless, macro variables like global liquidity and U.S. rate policy remain influential. Economic indicators are followed by traders as a further downward trend could boost the crypto demand.

At the time of writing, Bitcoin is trading at approximately $110,260 and is contracting within a narrowing range. With the compression of liquidity, the market is ready to make a decisive shift. Should bulls clear the level of $112,500, the next target lies at about $120,000, signaling a potential breakout from weeks of indecision.