Written by Samer Hasn, Senior Market Analyst at XS.com
Bitcoin is down notably today, shedding more than 1%, although it continues to hold above the $118,000 level. The altcoin market is seeing sharper losses, with total market capitalization dropping by over $20 billion during early trading.
The decline appears to be a technical correction, as sellers attempt to regain dominance despite the generally favorable broader market fundamentals.
On the fundamentals side, the U.S. and Japan have reached a major trade agreement that cuts tariffs on Japanese cars from 25% to 15%, secures a $550 billion Japanese investment in the U.S., where 90% of which will benefit the U.S. and opens Japanese markets to American goods. It also includes a joint LNG project in Alaska. This has boosted equities and index futures during the Asian session.
Such developments raise hopes for broader trade deals with the EU and China, easing fears of a global trade war. The shift in tone is also feeding risk appetite across markets, a factor that could support bullish momentum in crypto as well.
In parallel, growing institutional adoption continues to support sentiment. Blank-check company Dynamix is set to merge into a new entity called the Ether Machine, which will manage over $1.5 billion in Ethereum, backed by key players like Kraken and Blockchain.com, according to the Wall Street Journal. While still speculative in nature, this deal signals growing institutional trust and broader adoption of crypto, especially under a pro-crypto Trump administration.
That said, current levels are seen by many traders as attractive for profit-taking and for rebuilding bearish momentum. Sellers have regained control of over 52% of the trading volume of Bitcoin futures, according to CoinGlass. Open-interest-weighted funding rates for Bitcoin futures have also been trending lower since today’s open, signaling pressure on the bullish trend. Still, there’s no clear indication of widespread long liquidations, which has helped prevent a deeper correction so far.
Technically, the picture remains mixed. Although the RSI is in overbought territory, Bitcoin has broken above a wedge pattern and continues to hold above its upper boundary, keeping alive the possibility of a retest of the $120,000 level in the coming hours. The Heiken-Ashi chart on the daily timeframe also still suggests the uptrend remains intact.
Zaid Barem / ymm
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