TL;DR

Bitcoin forms weekly RSI divergence while the price makes higher highs, echoing the 2021 cycle top pattern. BTC trades below the $112K support; analysts warn of a broader correction if this level fails. Illiquid supply surges on Binance; whales holding tight may drive prices up or cause sharp drops.

Bitcoin Forms Bearish Divergence Similar to 2021

Bitcoin is showing a weekly chart pattern that resembles what appeared just before the 2021 cycle top. The current structure includes higher highs in price while the Relative Strength Index (RSI) forms lower highs. This divergence often appears when momentum slows down during a rally.

Crypto analyst Ali Martinez pointed out this signal. He explained that the same setup appeared ahead of the 2021 peak, where Bitcoin topped out and then began a longer downward phase.

Now, as BTC recently traded close to $120,000, the RSI has not kept pace. This gap between price and strength indicators suggests reduced buying pressure at higher levels.

Bitcoin $BTC is making higher highs while RSI makes lower lows. This is the same divergence seen before the 2021 cycle top! pic.twitter.com/tR0IT25AVf

Price Struggles Around Key Support Zone

Bitcoin was trading at around $110,100 at press time, showing a slight drop of 2% over the last 24 hours and 2% since last Friday. The $112,000 area is now viewed as a key support zone. Some analysts believe that holding this level could decide the short-term direction.

Michaël van de Poppe shared a chart showing that if Bitcoin breaks below $112,000, a deeper pullback could follow. He posted,

“If #Bitcoin cant hold above $112K, well probably face a very ugly correction across the board.”

The price has already dropped from its recent peak near $124,500 and has moved through several previous support levels, which may now act as resistance.

Source: X Short-term activity shows low volume compared to the recent high, with Bitcoin trading close to a moving average. A retest zone near $117,000 could come into play if the price moves upward, but sellers remain active near resistance.

Illiquid Supply Builds While Liquid Supply Drops

Data from Binance shows that Bitcoin’s illiquid supply is at a high point, while liquid supply is shrinking. This means more BTC is being held in wallets that aren’t used for frequent trading. Fewer units available on the market often lead to stronger price moves in either direction.

Remarkably, this change in supply has supported Bitcoin’s rise above $120,000, even with limited external investment. As fewer units are available for trading, any new demand could drive prices higher, especially with long-term holders not selling.

Source: CryptoQuant Analyst Arab Chain said, “Whales and institutions are currently adopting a hold for the long haul strategy,” but added that any change in this could trigger a fast drop.

A few analysts think Bitcoin may top $150,000 in 2025 due to the rise in illiquid supply. On the other hand, if big sellers emerge, the price could drop to $90,000 to $100,000 range. Depending on how liquidity plays out in the coming weeks, the market can either go up or experience a steep drop.