Bitcoin Rally Pauses at $120K — Why a Drop to $110K Could Strengthen the Uptrend

Bitcoin's rally has cooled off after pushing past the $120,000 mark. Profit-taking slowed the momentum, sending BTC down to a local bottom of $116,000 before renewed buying pressure stepped in.

Despite the brief correction, a deeper retracement toward $110,000 could offer a stronger base for the next leg up. The recent pullback lines up with a typical slowdown in summer trading activity, while broader markets, including U.S. equities, are showing signs of fatigue after a strong early-July run.

The S&P 500’s latest gains have been driven mostly by large-cap tech stocks, while the dollar index (DXY) remains significantly lower year-to-date. A rebound in the dollar could pressure risk assets like Bitcoin and equities, especially with inflation stuck at 2.5% and policy uncertainty from the Federal Reserve still in play.

Even with these headwinds, the bigger picture for Bitcoin remains bullish. A consolidation phase around $110,000 could offer the support needed for a more sustainable breakout.

Ethereum is holding up well despite the broader market dip. It has climbed over 33% in the past month and now trades above $3,400. Increased corporate accumulation and treasury diversification efforts are helping ETH stay resilient during this seasonal lull.

While short-term corrections may shake sentiment, the long-term outlook for both BTC and ETH remains strong, driven by continued institutional demand and macroeconomic tailwinds.