Bitcoin's Critical Support Levels and the Path to a Potential Reversal: A Technical and Risk Management Analysis

Bitcoin’s price in August 2025 has reached a pivotal juncture, with technical and on-chain indicators pointing to a critical test of key support and resistance levels. The immediate resistance cluster between $113,600 and $113,700 represents a psychological and structural barrier, as it aligns with the three-month and one-month cost basis for recent investors [4][5]. A breakout above this level could trigger a rally toward $115,600 or even $120,000, while a failure to reclaim it risks a breakdown into the $110,000–$112,000 support zone [3][4]. This zone has historically attracted institutional and retail buyers, but a further decline below $107,000–$100,000 could accelerate selling pressure toward $92,000 or $81,000 [1][2].

The $100,000 level is particularly significant, as it reflects the average cost basis of on-chain investors and coincides with the 200-day moving average [1][5]. A breach here could trigger a liquidity sweep, with short-term holders (STHs) selling at a loss, as evidenced by the SOPR (Spent Output Profit Ratio) falling below 1 [6]. Meanwhile, long-term holders (LTHs) remain resilient, controlling over 60% of circulating supply and maintaining a stable MVRV ratio of 2.3× [6]. This structural strength suggests a potential floor for Bitcoin , but only if the price stabilizes above $112,000 to avoid a prolonged bearish correction [2][4].

Technical indicators reinforce the uncertainty. The ADX (Average Directional Index) at 18.81 and RSI in the mid-60s indicate weak momentum and a need for directional clarity [6]. Historically, Bitcoin has shown bullish reversals at critical support levels, such as the $107,000 zone, which corresponds to the 50-day moving average and prior resistance peaks [3][5]. However, the weakening inverse correlation with the U.S. dollar (-0.29) and the Fed’s hawkish stance—reducing rate cut odds to 73.4%—add macroeconomic volatility [6].

Risk management remains paramount. Investors should consider stop-loss orders just below $100,000 and incremental entries within the $100,000–$107,000 range [1]. Position sizing should limit risk per trade to 1–2% of total capital to mitigate exposure to sudden volatility [1]. For retail investors, monitoring macroeconomic signals—such as the Fed’s Jackson Hole symposium and PPI/CPI data—is essential, as these could trigger unexpected corrections [6].

Historical patterns also offer insights. Bitcoin’s July 2025 all-time high of $123,737.94 was followed by a seven-week decline to $108,700, testing the $107,000 support level [1][3]. Similar to past cycles, the current price action mirrors 2020’s reversal patterns, where the Hammer and Inverse Head and Shoulders candlestick formations signaled bullish reversals with an 84% success rate [2][5]. These patterns, combined with on-chain metrics like net inflow into exchange wallets, provide a framework for anticipating trend changes [2]. Notably, a backtest of Bitcoin’s behavior after hitting support levels from 2022 to 2025 reveals a 58.6% win rate and an average 30-day return of +3.71%—mildly outperforming the market benchmark—suggesting that historical support levels retain some predictive power despite macroeconomic noise.

In conclusion, Bitcoin’s near-term trajectory hinges on its ability to defend the $112,000–$113,700 resistance cluster and avoid a breakdown below $100,000. While institutional confidence remains strong, short-term holders’ profit-taking and macroeconomic headwinds necessitate disciplined risk management. Investors should balance technical analysis with macroeconomic vigilance, using stop-loss orders and position sizing to navigate the volatile landscape.

Source:
[1] Bitcoin's Short-Term Fate Hinges On $112000 Realized
[2] Bitcoin's Next Stop $183K? On-Chain Data Points to Potential Cycle Top
[3] Bitcoin Price Analysis Today: Key Resistance at $113.6K
[4] Bitcoin faces critical resistance at $113,700, breakdown below $107k threatens return to 5 figures.
[5] Bitcoin's Support Range Set at $100000-$107000
[6] Bitcoin's Critical Support Levels: A Make-or-Break Moment