Bitcoin Plunges: Golden Opportunity or Classic Trap? Charts Flag a Path to $106,000

Bitcoin’s sharp sell-off has reignited the old debate: is this a buyable dip or a bull-trap in disguise? Price has sliced through short-term support, and momentum gauges are flashing caution. On the charts, the next confluence zone sits around $106,000—an area where prior demand, the 200-day average on some timeframes, and a cluster of realized-cost bands could intersect. If bears press their advantage, a liquidity sweep into that pocket would not be surprising.

Yet “down” does not equal “doomed.” In bull cycles, Bitcoin often retraces 20–35% before resuming its trend. What matters is how price behaves at inflection points. Watch for: (1) a decelerating sell-volume profile; (2) bullish divergence on 4H/1D RSI or MACD; and (3) a reclaim of a lost level that flips from resistance back to support. Without those, catching knives is guesswork.

Derivatives add context. Elevated funding, crowded longs, or rising open interest during a decline can signal forced unwinds still ahead. Conversely, normalized funding and shrinking open interest into support suggest sellers may be tiring. On-chain, monitor short-term holder SOPR near 1.0 and exchange netflows; sustained outflows into weakness often align with accumulation.

Strategy-wise, consider tiered entries rather than a full send at one level. For example: scale-in tranches between current price and the $106,000 zone, paired with invalidation below your final tranche. Use hard stops, and size positions so a stop-out is merely inconvenient, not catastrophic. If you prefer confirmation, wait for a clean reclaim and retest of a key level—even if that means paying a premium for higher probability.

Bottom line: $106,000 could become the market’s “line in the sand.” If buyers defend it with conviction, this drop may age as opportunity. If they fail, patience will be cheaper than bravado. Let the tape confirm your bias, not the other way around.

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