Bitcoin Breaks Above $123K, But May Stall Between $120K-$130K
Bitcoin (BTC) smashed through $123,000 early Monday, extending its bullish streak that started with BlackRock’s IBIT breakout last week. Traders are eyeing the next major milestone near $140,000.
Market sentiment is red-hot, fueled by a perfect mix of supportive macro factors: a pro-crypto U.S. president, ultra-low interest rates, heavy fiscal spending, and record highs in equities. Technically, bitcoin looks solid. Indicators like the RSI and MACD show no bearish divergences, while the 50-, 100-, and 200-day moving averages remain firmly in bullish alignment.
Open interest in BTC perpetual futures continues to grow, hinting at robust participation across trading desks.
Yet, despite the euphoria, analysts warn that BTC could be rangebound between $120,000 and $130,000 for a while. Here’s why:
1. Options Market Makers Are Long Gamma
According to data from Deribit tracked by Amberdata, options dealers are significantly long gamma in the $120,000 to $130,000 range, especially for expiries on July 25, August 1, and August 29.
When dealers hold long gamma, they typically counteract price swings by selling into rallies and buying dips to maintain neutral exposure. This activity can suppress volatility and keep bitcoin confined within a tighter trading band — the same dynamics kept BTC pinned between $108,000 and $110,000 earlier this month.
2. DVOL May Rebound
BTC’s powerful rally from $70,000 to $122,000 came alongside falling volatility, as shown by Deribit’s DVOL index, which tracks 30-day implied price swings. That’s unusual since rising prices often accompany higher volatility in crypto.
Lately, DVOL has stabilized around 36% annualized volatility, hinting that a reversal could be near. Technical signals, such as the MACD, suggest DVOL might start climbing again. Because DVOL and BTC prices have recently shown an inverse relationship, rising volatility could spark a short-term price correction.
3. Dollar Index Turns Higher
The U.S. Dollar Index (DXY) has surged about 17% this month, hitting 97.00 and breaking out of its previous downtrend. Factors including potential U.S. sanctions on nations buying Russian oil are bolstering the dollar.
A strengthening dollar tends to weigh on dollar-denominated assets like BTC and gold. If the DXY’s rebound continues, it could act as a headwind for bitcoin’s next leg up.
Key BTC Levels:
- Resistance: $130,000, $140,000, $146,000
- Support: $118,800, $116,650, $112,000
Ethereum Stuck Below Breakout Zone
Ethereum (ETH) has climbed 22% this month but remains trapped within a broadening formation traced by trendlines from May and June highs and lows.
While ETH is currently challenging the upper boundary of that pattern, daily stochastic readings indicate overbought conditions, suggesting the rally might pause before a sustained breakout. Should ETH push higher, $3,400 is the key target on traders’ radar.
- Resistance: $3,067 (61.8% Fibonacci retracement), $3,500, $3,570, $4,000
- Support: $2,905, $2,880, $2,739, $2,600
Solana Rebounds Strongly
Solana (SOL) continues to affirm its bullish signals following last Friday’s breakout, driven by an inverse head-and-shoulders pattern and a move above the Ichimoku cloud. Monday’s bounce after a mild weekend dip suggests buyers remain firmly in control.
A clean move above $168 would likely solidify momentum and open the door toward $200.
- Resistance: $180, $190, $200
- Support: $150 (100-day SMA), $145, $125
XRP Turns Bullish on MACD Shift
XRP (XRP) has flipped its weekly MACD histogram into positive territory, echoing the technical pattern that fueled bitcoin’s climb from $70,000 last year. The 14-day RSI is also at its strongest since December, indicating momentum is building for an eventual break above $3 and potential new record highs.
However, traders should watch for any bearish divergences on intraday charts, which could trigger short-term pullbacks.
- Resistance: $3.00, $3.40
- Support: $2.20, $1.90, $1.60
Bottom Line:
Bitcoin’s rally is backed by solid technicals and macro tailwinds, but options market dynamics, potential volatility upticks, and a strengthening dollar could keep BTC trading between $120,000 and $130,000 in the near term. Meanwhile, ETH, SOL, and XRP are each navigating their own technical landscapes, with breakout potential looming if market conditions remain supportive.
