Bitcoin Breaks Above $123K but Faces Possible Range-Bound Trading Ahead
Bitcoin (BTC) soared to a new record above $123,000 early Monday, continuing its powerful climb toward the $140,000 level after last week’s significant breakout in BlackRock’s IBIT.
Traders remain highly bullish, citing a “Goldilocks” macro environment: a pro-crypto U.S. president favoring ultra-low interest rates, fiscal stimulus in full swing, and booming equity markets. Technical signals back this optimism—momentum indicators like the RSI and MACD show no bearish divergence, while the 50-, 100-, and 200-day simple moving averages (SMAs) are aligned in a solid upward trend.
Open interest in bitcoin perpetual futures has also been surging, pointing to growing market engagement.
Still, some analysts say bitcoin may spend time consolidating between $120,000 and $130,000 before making its next big move. Here’s why:
1. Market Makers Long Gamma
Options market makers are heavily positioned with long gamma between strikes at $120,000 and $130,000, especially for contracts expiring on July 25, August 1, and August 29, according to Deribit data via Amberdata.
When market makers are long gamma, they tend to buy bitcoin as it drops and sell as it rises to maintain neutral exposure, creating a stabilizing effect on price volatility. This dynamic could keep BTC moving sideways in that range for a while—a similar situation earlier this month kept prices between $108,000 and $110,000.
2. DVOL May Reverse Higher
Bitcoin’s rally from $70,000 to $122,000 came with falling implied volatility, shown by the Deribit DVOL index, which measures expected 30-day price swings. Typically, DVOL and price move together in bull markets, but DVOL has trended lower even as BTC surged—a pattern common in equity markets during strong trends.
However, DVOL seems to have bottomed around 36% annualized volatility since late June. Technical signals, including MACD analysis, hint that DVOL might rise again soon. Since spot prices and DVOL have recently become negatively correlated, higher volatility could lead to a price correction.
3. Dollar Index Rebounds
The U.S. Dollar Index (DXY) has jumped about 17% this month, reaching 97.00 and breaking through its prior downtrend. The dollar’s strength is partly driven by geopolitical factors, including possible new U.S. sanctions on countries purchasing Russian oil. A stronger dollar can weigh on dollar-denominated assets like bitcoin and gold, potentially limiting BTC’s upside if the DXY rally continues.
Key Levels for BTC:
- Resistance: $130,000, $140,000, $146,000
- Support: $118,800, $116,650, $112,000
Ethereum Presses Against Resistance
Despite a 22% gain in July, Ethereum (ETH) remains stuck inside a broadening channel formed by connecting its May and June highs and lows.
Prices are testing the upper boundary of this channel, but the daily stochastic oscillator indicates overbought conditions, suggesting that a breakout might fail without a corrective pullback first. A successful breakout would shift focus to $3,400, a level traders are watching closely.
- Resistance: $3,067 (61.8% Fibonacci level), $3,500, $3,570, $4,000
- Support: $2,905, $2,880, $2,739, $2,600
Solana Rebounds After Dip
Solana’s SOL (SOL) continues to show bullish signals after Friday’s breakout, driven by an inverse head-and-shoulders pattern and a move above the Ichimoku cloud. Monday’s rally from a minor weekend dip reinforces the view that the recent breakouts were genuine.
A push through $168 would further confirm momentum and potentially pave the way for a move to $200.
- Resistance: $180, $190, $200
- Support: $150 (100-day SMA), $145, $125
XRP Turns Bullish on MACD
XRP’s (XRP) weekly MACD histogram has flipped above zero, mirroring a technical pattern that previously sparked bitcoin’s rally from $70,000 last year. Along with the strongest 14-day RSI readings since December, this suggests XRP could soon break above $3 and target new record highs.
Still, traders should watch for bearish divergences on shorter timeframes, which could signal temporary pullbacks.
- Resistance: $3.00, $3.40
- Support: $2.20, $1.90, $1.60
Takeaway:
Bitcoin remains on solid ground, driven by strong technicals and a favorable macro backdrop. However, market mechanics like options hedging, the potential rise in volatility, and dollar strength could keep BTC oscillating between $120,000 and $130,000 for a while. Meanwhile, ETH, SOL, and XRP each face their own technical tests that could define their next major moves.
