Bitcoin eases lower, but a breakout to record highs could be coming

Bitcoin is edging below 107K on Tuesday after the price ran into resistance at 108.8 K. However, with institutional and corporate demand still strong, combined with an encouraging Q3 post-halving seasonality tailwind, BTC could be on the verge of retesting 110 K and fresh record highs. 

Q3 seasonality tailwind 

The July to September quarter is typically the weakest quarter for Bitcoin’s performance. According to Coinglass data, the average quarterly return for the third quarter period is just 6% compared to 85% in Q4, 51% in Q1, and 27% in Q2. Therefore, Bitcoin could be expected to continue consolidating above $100,000. 

However, it's also worth noting that the July to September period in post-halving years has consistently demonstrated strength, outperforming the Q3 period in other years.  In the previous cycle in 2021, the BTC price rallied by 25% in Q3. Meanwhile, the 2017 post-halving year saw gains of 80% in Q3. This could reinforce the case for a bullish breakout in the coming quarter. 

Institutional and corporate demand  

Bitcoin ETFs booked a 15^th consecutive day of net inflows on Monday as institutional demand shows no signs of letting up. BTC ETFs recorded $4.06 billion in net inflows in June, marking the third straight month of net inflows, which totaled $12.8 billion across the quarter. Persistent institutional demand could lift BTC to record highs. JP Morgan highlighted strong institutional demand as a factor that could see BTC outperform Gold in the second half of 2025.  

Separately, corporate demand for BTC shows no signs of drying up. Strategy and Meta Planet added a further 4,980 BTC to their holdings yesterday. According to BitcoinTreasuries.net, the number of entities holding Bitcoin is up by 22 over the past 30 days, with 141 public companies now holding BTC. 

Fed rate cut expectations rise

Following Fed Chair Powell’s testimony before Congress last week, market expectations for a Fed rate cut have increased. Ahead of ISM manufacturing and JOLTS jobs claims data today, the market is pricing in an 80% chance of a 25 bps cut in September, up from 70% a week ago and 55% a month ago. Any signs of weakness in the data could add to rate cut expectations, boosting BTC and US stocks. Fed Chair Powell is also due to speak. 

Given the increasing institutional and corporate demand, expectations for Fed rate cuts, and the improving regulatory backdrop, the fundamental outlook for BTC remains positive. 

Bitcoin technical analysis 

After running into resistance at 111.9k, the price has been trending lower in a bull flag formation. The price recovered from the 98k lower band and tested 108.5k, the upper band of the flag formation, but has so far failed to break out. 

Buyers will need to rise above the 108.5k level, which it has tested on several occasions over the past two weeks. A rise above 110k opens the door to new record levels, potentially reaching 120k. 

Failure to rise above the upper band of the flag pattern would see the price head lower. A break below the 20 SMA at 106k opens the door to a deeper sell-off towards 103k, the midpoint of the channel, and 100k, the psychological level. It would take a break below 98k to negate the bull flag pattern. 

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