Bitcoin Faces Potential Correction as Traders Eye Sub-$100K Liquidity

Introduction: A Looming Correction for Bitcoin

Bitcoin (BTC) is facing heightened scrutiny as its price consolidates around $105,000, down 6% from its all-time high of $111,900 on May 22, 2025. Traders are warning of a potential "larger correction" that could see BTC test liquidity below the $100,000 psychological level. This article delves into the technical and market dynamics driving these predictions, the key support levels to watch, and the factors that could influence Bitcoin’s next move.

Current Price Action and Market Sentiment

As of June 3, 2025, Bitcoin is trading at approximately $105,000, struggling to flip the $106,000 resistance into support. After a 3% rebound from weekend lows, the failure to break this key level has fueled concerns about a deeper pullback. Analyst Michael van de Poppe noted that Bitcoin’s rejection at $106,000 could lead to a drop toward $100,000, a critical psychological and technical level. Posts on X and trader commentary reflect growing caution, with some, like CrypNuevo, describing $100,000 as a “price magnet” due to stacked liquidity.

Technical Indicators Signal Weakness

Several technical signals suggest Bitcoin’s bullish momentum is waning:

• Bearish Divergence: A weekly chart divergence between price and the Relative Strength Index (RSI), as highlighted by trader Matthew Hyland, indicates weakening momentum, a precursor to potential corrections.

• Support Levels: The four-hour chart shows $100,000 as a key support, aligning with the 150-period Exponential Moving Average (EMA). Additional support lies at $93,200, where $170 million in bid liquidity is concentrated, per CoinGlass data.

• Liquidity Heatmap: Significant liquidity clusters below $103,000 and above $110,000 suggest potential volatility, with traders like AlphaBTC noting the possibility of a “liquidity grab” targeting sub-$100,000 levels before a rally. Failure to hold $104,000 could accelerate selling pressure, pushing BTC toward these lower supports.

Market Dynamics and Liquidity Concerns

The recent correction follows a $3.7 billion wipeout in futures open interest (OI) as Bitcoin fell from $108,000 to $104,500 between May 27 and May 30, 2025. This reset, described as a “healthy” clearing of overleveraged positions, has not deterred professional traders, with futures OI remaining near all-time highs at 700,000 BTC. However, $617.85 million in long liquidations over the past week signals profit-taking and caution among retail investors.

• ETF Outflows: Spot Bitcoin exchange-traded funds (ETFs) saw $347 million in net outflows on May 29, contrasting with earlier inflows of $320 million on May 14, reflecting mixed institutional sentiment.

• Geopolitical Tensions: Stalled U.S.-China trade talks and Russia-Ukraine concerns have eroded confidence in risk assets, contributing to Bitcoin’s 5.5% drop from May 27 to May 30.

Bullish Counterarguments and Support Zones

Despite the bearish outlook, some traders remain optimistic:

• Strong Support: Glassnode’s Market Value to Realized Value (MVRV) bands suggest $100,000 could hold as a robust support level, preventing a deeper crash.

• Whale Activity: Large-volume traders are accumulating BTC around $100,000, with CryptoQuant reporting increased holdings in wallets with 1,000–10,000 BTC since May 6, 2025, signaling confidence in a rebound.

• Futures Market Resilience: Analyst Altcoin Sherpa highlighted a key support zone between $102,000 and $104,500, where BTC previously consolidated, predicting a potential bounce above $107,000 within days. Trader Honey also noted that corrections are buying opportunities, especially after a “golden cross” on BTC’s chart, suggesting dips toward $100,000 could attract buyers.

Potential Downside Risks

If Bitcoin fails to hold $104,000, traders warn of a deeper correction:

• Key Levels: A drop below $100,000 could target $93,200, where significant bid liquidity exists, or even $90,500, aligning with the 21-week moving average.

• Market Sentiment: Retail sentiment is at a 90-day low, with only 31.59% of retail accounts holding long positions, increasing the risk of panic selling if $100,000 breaks.

• External Pressures: Rising Treasury yields and geopolitical uncertainties could exacerbate selling, with some traders, like Crypto Caesar, suggesting a possible dip below $100,000.

Long-Term Outlook: Bullish Despite Short-Term Pain

Despite the correction risk, long-term projections remain bullish. Analysts like Willy Woo cite strong buy-side liquidity and institutional adoption, predicting BTC could reach $150,000–$250,000 in 2025 if key supports hold. Standard Chartered and others see Bitcoin’s shrinking supply and ETF inflows driving prices toward $130,000 or higher, though a 2026 correction looms in cycle-based models. Posts on X also highlight $120,000 as a short-term target if $106,000 is reclaimed, with $11.5 billion in shorts at risk if BTC hits its $111,900 high again.

Conclusion

Bitcoin’s price is at a critical juncture, with traders bracing for a potential correction toward sub-$100,000 liquidity if $106,000 resistance persists. Technical indicators and market dynamics suggest volatility ahead, driven by profit-taking, geopolitical risks, and ETF outflows. However, strong support at $100,000, whale accumulation, and resilient futures markets offer hope for a rebound. Investors should monitor the $104,000–$106,000 range closely, as the outcome will determine whether Bitcoin resumes its bull run or faces a deeper pullback in June 2025.