Bitcoin Dips Below $110K: Analysts See Bullish Setup Intact

In the face of a 5% weekly decline that pushed Bitcoin below $110,000, analytics platform Swissblock has provided a counter-narrative to prevailing bearish fears. In an X post on September 26, the firm presented on-chain analysis indicating that Bitcoin’s bullish structure remains unbroken. The core of their argument hinges on the ‘risk-off signal,’ a metric that assesses market regime. According to Swissblock, Bitcoin has not yet entered a ‘high-risk regime,’ which would be a definitive confirmation of a trend reversal. The persistence of a ‘low-risk regime’ suggests that the recent price action is more likely a correction within a broader uptrend than the start of a new bear market.

Swissblock anticipates that a recovery will likely commence once Bitcoin finds solid footing at its immediate support level of $108,000. The firm predicts that the next leg higher will be ‘largely driven by institutional demand.’ This expectation comes with a caveat, however. While September’s price performance was better than some anticipated, inflows into Spot Bitcoin ETFs notably reduced in the latter half of the month. This slowdown underscores the need for renewed and heightened institutional interest to catalyze the next significant price advance.

The call for increased institutional participation is intensified by current activity among long-term Bitcoin holders. Swissblock notes that these veterans of the market are ‘significantly reducing their holdings,’ a activity the firm describes as ‘classic late-cycle behavior.’ Such selling pressure from foundational investors typically points toward the maturation of a market cycle. However, Swissblock’s analysis suggests this indicator is currently negated by the absence of the high-risk signal. This creates a potential opportunity for institutions to ‘step in to mop up the growing supply’ being sold by long-term holders, effectively providing a new base of demand.

This dynamic presents a critical juncture for the market. The stability of the bullish structure, as argued by Swissblock, is contingent on institutional capital returning to absorb the selling. A failure of this demand to materialize could put additional downward pressure on prices. At press time, Bitcoin was trading at $109,401, showing a minor 0.11% daily gain, while its daily trading volume had declined by 19.16% to $60.52 billion, reflecting a period of consolidation and potentially cautious sentiment.

Adding a layer of historical optimism to the technical analysis, prominent crypto analyst Lark Davis has pointed to a recurring seasonal pattern. Davis notes that Bitcoin’s net negative performance in September has frequently been a precursor to a powerful bullish surge in the fourth quarter. He provided specific examples: in September 2023, Bitcoin declined by 8%, only to rally by an impressive 77% in Q4. Similarly, in September 2024, prices dropped by 18% before surging 101% in the following three months.

With Bitcoin down approximately 8% over the past eight days, Davis suggests the market is setting up what appears to be a typical ‘rektember’ playbook. This historical analogy implies that the current weakness may not be a cause for panic but rather a potential setup for investors to position themselves for another significant price leap. The pattern suggests that September’s losses are often recovered and exceeded in the final months of the year, providing a compelling narrative for a bullish outlook despite short-term volatility.

The current Bitcoin landscape is defined by conflicting signals. On one hand, price action is undeniably weak, with the asset testing key support levels and long-term holders taking profits. On the other, analytical frameworks from firms like Swissblock argue the core bullish trend is healthy, while historical data presented by analysts like Lark Davis suggests seasonal tailwinds may be imminent. The key variable appears to be institutional demand. A resurgence in ETF inflows could validate the bullish theories and provide the fuel for a year-end rally.

For investors, the environment demands careful scrutiny. The $108,000 support level identified by Swissblock serves as a critical line in the sand. A sustained hold above it, coupled with a return of institutional buying, would strongly support the case for a renewed upward move. Conversely, a breakdown could signal a deeper correction is underway. For now, leading analysts are interpreting the dip not as a breakdown, but as a potential setup for Bitcoin’s next significant advance.