Bitcoin is holding steady above an important support area, with traders expecting a breakout for its next big move. After a recent rally, which was fueled by strong U.S. economic data and lower inflation, Bitcoin’s momentum has temporarily slowed down. Since hitting a low on April 9, market growth and liquidity have remained positive. The upcoming August 1 tariff deadline may impact market behavior, but delays or softer approaches are possible. Overall, the market outlook is optimistic, with few bearish influences. Risks to watch for include growth concerns related to tariffs or unexpected changes in interest rate expectations. On the 4-hour chart, Bitcoin is consistently bouncing off a crucial support zone around $116,000, indicating that buyers are stepping in when prices dip. There’s a clear risk of a downturn if it falls below this trendline, as traders are targeting new all-time highs. If it breaks below this support, we could see a deeper correction down to the $110,000 trendline. The 1-hour chart shows a descending triangle pattern in recent price movements. Prices can break out in either direction from this pattern, often leading to a strong price shift. This market consolidation offers a great opportunity for derivative traders. With the descending triangle pattern on the short-term chart, we expect a significant breakout soon. This suggests that strategies based on volatility, like buying a straddle or strangle, could be profitable by taking advantage of a big price swing in either direction. We believe the easiest path for Bitcoin is upwards, supported by positive macroeconomic conditions. The latest U.S. Consumer Price Index data shows inflation dropped to 3.3%, which raises hopes for potential Federal Reserve rate cuts later this year. Options data also reflects this sentiment, as the 25-delta skew for Bitcoin options remains neutral to slightly positive, indicating traders are not heavily betting on a price decline. A high level of open interest in futures, exceeding $30 billion across major exchanges, shows that there’s significant capital ready for a move. Although realized volatility has decreased during this period of consolidation, implied volatility in options has remained steady. This difference often signals sharp price movements on the horizon. However, we need to be cautious about the risk of a downturn below the key support zone, which we set around $65,000. If tariff policies cause a growth scare or interest rate expectations become more aggressive, we could see prices drop further toward the $60,000 level. A smart strategy would involve buying protective puts with strike prices below the current support level to safeguard against this risk. This phase of sideways price action resembles what we observed in the fourth quarter of 2020, just before a major market breakout. That extended period of consolidation drained sellers and absorbed excess supply before a strong trend began. We view the current market structure similarly, indicating it is gearing up for its next significant move.

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