Bitcoin targets $122K but seasonal risks could slow gains

Bitcoin (CRYPTO:BTC) briefly dipped below $117,000 on Tuesday as about $100 million in long positions were liquidated, according to market data.  

The 100-day exponential moving average on the four-hour chart provided short-term support and limited the downside risk.

Market liquidity appears thin until $114,500, leaving the path of least resistance higher towards the $120,000 to $122,000 area.

This zone is significant due to sell-side liquidity and stop orders clustered near $121,600, where liquidations of roughly $2 billion in short positions could occur.  

A daily supply zone between $121,400 and $123,200, which marks previous resistance, adds to this confluence.  

While short-term signals suggest a bullish recovery, longer-term indicators warn that momentum could be fading.  

A potential double top near Bitcoin’s all-time high may indicate buyer fatigue if prices fail to break cleanly above $123,200.  

On-chain data shows the daily relative strength index fell sharply from 74.4 to 51.7, signalling possible exhaustion in the spot market.  

Daily trading volumes dropped to about $8.6 billion, and spot Bitcoin ETF inflows declined by 80% week-over-week to $496 million.  

These trends point to diminishing institutional demand and participation.  

Futures open interest remains high at $45.6 billion, with increased long-side funding suggesting investor overconfidence.  

Currently, 96.9% of Bitcoin supply is in profit, increasing the risk of near-term profit-taking.  

Seasonal factors also weigh on the outlook, with August historically showing over 60% of closing days in negative territory and an average return of 2.56%.  

However, upcoming US policy announcements and the Federal Open Market Committee meeting this week could shift sentiment.  

The White House is expected to release a strategic crypto policy report that may positively impact Bitcoin.  

Federal Reserve Chair Jerome Powell’s commentary on potential rate cuts could also influence market direction.  

If favourable, these developments might propel Bitcoin above the $123,000 resistance level.  

At the time of reporting, BTC price was $118,013.