Bitcoin’s recent price movements have caught the attention of market analysts, echoing a cautionary tale last seen in 2021. As of August 2025, Bitcoin finds itself hovering around the crucial $112,000 support level. A growing illiquid supply and steadfast “whale” holders underscore this tense moment, as the Relative Strength Index (RSI) divergence flashes a red warning signal.
The Tale of the Tape
The cryptocurrency market has seen its share of turbulence, but the current situation with Bitcoin might feel eerily familiar to seasoned traders. The RSI, a key momentum indicator, is showing a bearish divergence. This technical pattern suggests that while prices have been climbing, the underlying momentum is weakening—a classic precursor to potential declines.
“Bitcoin’s RSI divergence is a signal we can’t ignore,” says crypto analyst Laura Kim. “It’s like 2021 all over again, where we saw a similar setup before a significant pullback.” Back then, the crypto market experienced a dramatic correction that wiped out billions in market value. This sentiment is echoed in recent analyses, such as Bitcoin traders say BTC price at ‘make-or-break’ point at $110K, highlighting the precarious nature of the current market conditions.
The $112,000 support level is critical. Should Bitcoin break below this, it may open the floodgates to further selling pressure. Yet, not everyone is reaching for the panic button just yet. The market’s top players, or “whales,” continue to hold onto their vast stashes of Bitcoin, seemingly unperturbed by the storm clouds on the horizon.
Whales and Illiquid Supply
Whales, those with substantial holdings, have been a stabilizing force in the crypto world. Their decision to hold rather than sell adds an intriguing layer to the current market dynamics. “The whales are like anchors in this sea of volatility,” notes economist Jake Patel. “Their behavior often dictates market sentiment.”
Moreover, the illiquid supply of Bitcoin is on the rise, with more coins being transferred to wallets that show no signs of imminent selling. This trend typically suggests long-term confidence among holders, yet it paradoxically contributes to price volatility. When fewer coins are available for trading, any significant buying or selling can lead to exaggerated price movements.
Historical Context and Market Sentiment
Bitcoin’s history is peppered with cycles of meteoric rises and sharp corrections. The 2021 event serves as a stark reminder of how swiftly the tables can turn in the crypto markets. Back then, Bitcoin saw a dramatic fall after reaching new heights, driven in part by similar RSI divergences and changes in market liquidity.
“History doesn’t repeat, but it often rhymes,” says market historian Elena Voss. The current setup has experts debating whether Bitcoin will script a different narrative this time. Some believe that the market’s maturity and the growing adoption of Bitcoin as a legitimate asset class could buffer against a repeat of past declines. Insights from Bitcoin trader sees $117K coming as BTC price reclaims key trend line suggest optimism about potential upward movements, despite current uncertainties.
Yet, skeptics remain. The crypto market, still relatively young compared to traditional financial systems, is prone to rapid sentiment shifts. Regulatory developments, technological advancements, and macroeconomic trends can all sway market dynamics.
Looking Ahead
As Bitcoin navigates these choppy waters, the question on everyone’s mind is whether the cryptocurrency can maintain its position above key support levels. The outcome could hinge on a mix of technical factors and broader market sentiment. If history is any guide, the coming months may prove pivotal for Bitcoin’s trajectory.
Investors and analysts alike will be keeping a close eye on the RSI and other technical indicators for signs of either stabilization or further declines. Meanwhile, the actions of whales and the status of Bitcoin’s illiquid supply will be crucial in shaping market expectations.
In the end, while the past offers clues, the future remains uncertain. The crypto world is nothing if not unpredictable, and Bitcoin’s next move—up, down, or sideways—could surprise even the most seasoned market veterans. As August 2025 unfolds, the only certainty is that the digital currency will continue to captivate and confound in equal measure.
Source
This article is based on: Bitcoin Price Echoes 2021 Warning as RSI Divergence Flashes Red
Further Reading
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- Strategy buys $357M in Bitcoin as price drops to $112K
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
