Bitcoins rally took a brief pause after breaching the $120,000 mark. What followed were profit-taking flows that capped the momentum built over the past week. The asset eventually found a local bottom at $116,000, where bids re-emerged to support the price.

However, QCP Capital believes that another pullback toward $110,000 may provide a more stable foundation for the current rally to consolidate.

Bitcoin Needs a Breather

In its market update, QCP Capital noted that the latest market correction coincides with a seasonal slowdown in trading activity as the summer holidays approach, while US equities drift sideways, which points to exhaustion after a solid run since early July.

Despite multiple headwinds, ranging from elevated base tariffs to geopolitical tensions over Russian oil purchases, equities have held firm. More importantly, the SP 500s latest gains are disproportionately driven by NVDAs surge to fresh record highs, echoing the indexs move to new peaks while the broader Magnificent Seven continue to edge up.

Meanwhile, the dollar index (DXY) remains down 10% year-to-date, which has driven performance across USD-denominated assets, including equities, gold, and Bitcoin, though in real terms these assets remain below prior highs when adjusted for the weaker dollar.

QCP said that with net USD positioning now short, although not yet extreme, the risk of a sharp dollar rebound is rising, which could trigger a correction across risk assets. US inflation remains stuck at 2.5% with little sign of further softening, thereby keeping markets vulnerable to sudden price shocks, even as the Fed maintains guidance for potential rate cuts in the next quarter. This has introduced uncertainty around the timing of any policy pivot.

Against this backdrop, QCP said it remains structurally bullish on BTC and views a potential retracement toward the previous cycle high around $110,000 as a healthy consolidation level for the rally.

ETH Defies Seasonal Lull

Ethereum is also showing relative strength. The altcoins trajectory is being supported by treasury diversification initiatives from SBET and increased ETH accumulation by corporates following this lead.

The firm said that such moves could continue to bolster resilience across crypto markets despite the seasonal lull and the risk of a temporary dollar bounce weighing on broader risk sentiment.

ETH has surged by more than 33% over the past month and is trading above $3,400. Market strategist Tom Lee predicted that the leading altcoin is set to surge past its 2021 all-time highs as stablecoin growth and real-world asset tokenization drive ETH demand.