Bitcoin (BTC) faced rejection at a critical resistance level near $106,406 on Wednesday, trading below $106,000 as signs of market fatigue emerge. Despite lingering bullish momentum, chain data reveals growing bearish pressure — particularly from record-breaking profit-taking activity observed on Tuesday. Meanwhile, institutional exposure through CME futures and leveraged ETFs has seen only modest growth, remaining well below previous peaks. This cautious positioning suggests that while the long-term trajectory may still favor higher prices, short-term consolidation or correction appears increasingly likely.
Rising Profit-Taking and Dormant Wallet Movements Signal Caution
On-chain metrics are flashing early warning signs of a potential pullback. According to Santiment’s Net Profit/Loss (NPL) indicator, BTC holders began locking in profits aggressively around the $106,000 mark.
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The NPL metric spiked sharply on Tuesday, marking the highest level of realized profit-taking so far this cycle. This surge indicates that a significant number of holders sold their positions at substantial gains — a classic behavior often observed near local tops. Increased selling pressure from these realized profits can weigh heavily on price momentum, especially if it coincides with reduced buying interest.
Another concerning signal comes from Santiment’s Age Consumed index, which tracks the movement of long-dormant coins. A spike in this metric suggests that "sleeping" tokens — those held untouched in wallets for extended periods — are being spent or transferred, often preceding short-term market reversals.
Historically, such spikes have preceded downward corrections in Bitcoin’s price, as holders move assets toward exchanges in preparation for selling. The most recent surge is the strongest since mid-May 2024, reinforcing the idea that BTC may be entering a phase of consolidation or downside volatility.
CME Exposure Reflects Widespread Market Caution
A recent report from K33 Research highlights only a marginal increase in Bitcoin exposure among institutional players and leveraged ETFs on the Chicago Mercantile Exchange (CME). While open interest has risen slightly, it remains far below prior cycle highs — an indication of restrained institutional appetite despite strong price performance.
For example, the VolatilityShares 2x Leveraged BTC ETF held approximately 54,025 BTC as of Tuesday — up from a low of 43,405 BTC on April 8 but still about 23,485 BTC below its all-time high reached on December 17. Similarly, direct market participants have maintained conservative positions.
“Insufficient inflows into these instruments have dampened premium expansion, reducing the appeal of basis trades for direct participants,” noted K33 analysts.
This relatively low exposure on regulated futures markets contrasts with higher activity seen in offshore perpetual contracts. Data shows that nominal open interest (OI) in BTC perpetual swaps has climbed to levels last seen in November and December 2024 by late May.
“This OI growth occurred under a highly ambiguous funding rate regime,” K33 added.
The lack of directional bias in leveraged trading — meaning both longs and shorts are active — creates a fragile equilibrium. As a result, any sharp price move could trigger cascading liquidations in both directions, amplifying volatility.
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This structural setup increases the risk of sudden swings, making the near-term outlook more uncertain even within a broader bullish trend.
Bitcoin Price Outlook: Rejection at $106,400 Raises Correction Risks
Bitcoin failed to close above the key daily resistance level of $106,406, retreating to trade around $105,400 at the time of writing. After briefly recovering over the weekend and Monday, the price encountered renewed selling pressure at the same resistance zone on Wednesday.
If BTC fails to reclaim and sustainably close above $106,406, further downside may unfold. The next major support level lies at $100,000 — a strong psychological and technical floor. A drop toward this level would align with typical post-rally consolidation patterns seen in previous cycles.
Technical indicators support this cautious view:
- The daily Relative Strength Index (RSI) is currently at 53 and trending downward toward its neutral midpoint of 50. A break below 50 would signal weakening bullish momentum and strengthen bearish sentiment.
- The MACD indicator shows a bearish crossover, with the histogram bars deepening in negative territory. This reinforces expectations of continued downward pressure in the near term.
However, a sustained breakout above $106,406 could invalidate the correction scenario. In that case, Bitcoin might resume its upward trajectory toward its all-time high of $111,980 — and potentially beyond.
Many analysts still believe the macro environment supports a longer-term move toward $100,000 or higher, driven by halving dynamics, growing institutional adoption, and limited supply availability. But in the short run, profit-taking and positioning adjustments appear to be taking center stage.
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Frequently Asked Questions (FAQs)
Q: Why is profit-taking significant for Bitcoin’s price?
A: When large numbers of investors sell at a profit — especially after sharp rallies — it increases selling pressure. If buying demand doesn’t keep pace, prices can stall or reverse. Record profit-taking often precedes short-term corrections.
Q: What does dormant wallet activity mean for BTC?
A: When coins that haven’t moved in months or years suddenly get transferred, it often signals that long-term holders are preparing to sell. This can foreshadow increased supply hitting the market and potential downside pressure.
Q: How do CME futures reflect market sentiment?
A: Institutional participation in regulated futures markets like CME provides insight into professional trader behavior. Low open interest compared to prior peaks suggests caution — institutions aren’t aggressively betting on further upside yet.
Q: Is a drop to $100K still possible despite current pullback?
A: Yes. Short-term corrections don’t negate long-term bullish trends. Many analysts expect BTC to reach $100K or more over the next 6–12 months due to supply constraints and growing adoption, even if it first pulls back to $100,000.
Q: What technical levels should I watch for BTC?
A: Key resistance is at $106,406. A close above confirms bullish continuation. Key support is at $100,000. A breakdown below could open space toward $95,000–$97,000 depending on momentum.
Q: How do perpetual contracts affect volatility?
A: High open interest in leveraged perpetual swaps increases liquidation risks. With no clear directional bias, even small price moves can trigger cascading long or short squeezes — leading to exaggerated swings.
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