Bitcoin's Pivotal Moment: Technical and On-Chain Analysis

Technical Analysis and On-Chain Insights

Bitcoin, currently trading at approximately $104,600, is facing a critical juncture. Despite reaching a peak near $110,000, the cryptocurrency has struggled to regain momentum, with price action forming lower highs on decreasing volume. Technical analysis highlights a precarious position above the 26-day Exponential Moving Average (EMA). A decline below $103,972 could intensify downward pressure, potentially pushing Bitcoin back into the high $90,000 range or lower.

Exchange Reserves and Market Implications

On-chain data from CryptoQuant reveals a significant outflow of Bitcoin from exchange reserves. Since early 2023, reserves have dropped from 2.75 million BTC to 2.43 million by late May 2025, marking a substantial reduction of over 300,000 BTC in less than 18 months. While declining reserves typically suggest reduced selling pressure, the weak price action tells a different story. This divergence indicates that demand may be diminishing faster than supply, raising concerns about a potential liquidity vacuum.

Key Takeaways

The path of least resistance appears downward, with a retest of $100,000 anticipated. Traders should brace for a possible decline below $98,000 unless Bitcoin regains support above its EMA and achieves higher highs. While the supply of Bitcoin is shrinking, the waning willingness to buy could exacerbate market vulnerability. The market faces two potential scenarios: a supply shock-driven rally if buyers return or a structural collapse if institutional interest wanes.