Bitcoin (BTC) is rapidly approaching the $100,000 threshold, with renewed optimism sparked by President Donald Trump’s hints of a major trade deal, possibly with the U.K. This surge in Bitcoin’s price is part of a broader bullish trend that is lifting traditional financial markets as well, with Asian stocks and S&P 500 futures both showing positive movements.
However, several key factors suggest that Bitcoin’s climb to $100,000 may face some resistance.
Trade Deal Announcement May Be Overhyped
While Trump’s statements have fueled speculation, The Wall Street Journal reports that the much-anticipated trade deal could merely be a framework for future negotiations rather than a finalized agreement. This could result in market disappointment if the announcement fails to meet expectations, causing the bullish momentum behind Bitcoin to slow down.
Resistance at $99,900 May Slow the Rally
Bitcoin is now nearing the crucial $99,900 level, which could act as a significant resistance point. Many investors who bought Bitcoin around this price earlier in the year may look to take profits, adding selling pressure to the market. This could delay a clean break through the $100,000 mark, leading to a period of consolidation before another attempt at the level.
Diverging Coinbase Premium Signals Weakening Demand
The Coinbase premium, which tracks the price difference between Bitcoin on Coinbase and Binance, has historically been a good indicator of U.S. investor interest. However, since late April, the Coinbase premium has shown signs of bearish divergence with Bitcoin’s price. This suggests that U.S. investor demand may be weakening, which could reduce the overall strength of the rally.
RSI Divergence Points to Potential Slowing Momentum
Despite Bitcoin hitting new multi-week highs, the 14-hour relative strength index (RSI), which is used to gauge momentum and overbought conditions, has not kept pace with price action. This bearish divergence points to a weakening of momentum, suggesting that Bitcoin’s rally may be losing steam and could face a correction before continuing its ascent.
In conclusion, while Bitcoin is edging closer to the $100,000 mark, factors like the potential underwhelming trade deal announcement, resistance at $99,900, weakening demand from U.S. investors, and bearish RSI divergence point to possible challenges ahead. Traders should be cautious of potential pullbacks and prepare for volatility as Bitcoin navigates these key levels.
