Bitcoin tags bear market trendline as $66K resistance decides breakout

Bitcoin tagged the descending trendline capping the market since October's all-time high, where a breakout above $66,200 to $66,800 would confirm a new bull phase.

A two-week liquidation heatmap from Binance shows a concentration of short liquidation liquidity clustered around $66,000, according to CryptoPotato's technical analysis published Aug. 6.

Trading volume has slumped to $2.2 billion a day this month, down from a $5.1 billion average in January, while Bollinger bandwidth on the daily chart has tightened to 5.66 points, the narrowest since the start of the year.

A confirmed break above $66,200 to $66,800 would open the path toward $72,000 to $74,000, while a rejection risks a retest of the $61,800 to $62,300 demand zone, setting the short-to-medium term direction for the broader digital asset market.

Bitcoin traded near $65,000 at the Asian session open (00:00 UTC) on Aug. 6, having recovered from the $61,800 to $62,300 demand zone over the past week. The asset remains beneath its declining 100-day and 200-day moving averages, which continue to reinforce the broader bearish structure, according to the analysis.

The immediate barrier sits at $64,800 to $65,400, a supply zone that has rejected the price several times over the past two weeks. A successful break above that region would likely open the door for another rally toward the daily resistance at $66,200 to $66,800.

Short Liquidity Cluster Builds Above $66K

The liquidation heatmap highlights a significant concentration of short liquidation liquidity above the current price, particularly around the $66,000 region. If buyers push through the nearby resistance, the liquidation of overleveraged short positions could trigger a short squeeze, accelerating bullish momentum toward higher resistance levels.

While a liquidation cluster also exists below the current market, it primarily reflects aggressive long positioning. The larger and more attractive liquidity target remains overhead, favoring an upside sweep if buyers can maintain control.

Volume Slump Precedes Volatility

The quiet price action mirrors a broader compression in volatility. Bollinger bandwidth on bitcoin's daily chart has tightened to 5.66 points, the narrowest since January, when the price was stuck between $86,000 and $90,000 before swinging to nearly $98,000 and then sliding to around $60,000 within weeks.

Trading volume has fallen to $2.2 billion a day this month, on track for the lowest since November 2023, according to K33 research. Historically, such prolonged stretches of tight trading ranges have preceded sharp moves in bitcoin's price, though the direction of the next big move is uncertain.

The outcome at this critical technical juncture is likely to set the short-to-medium term direction for the entire digital asset market. A confirmed breakout above the trendline could attract fresh institutional inflows and lift altcoins, while a rejection would reinforce the bearish structure and pressure the broader crypto complex. Ethereum, which has not broken its own bear-market trendline, remains a key gauge of whether the recovery broadens beyond bitcoin.

This article is for informational purposes only and does not constitute investment advice.