The world's first cryptocurrency finds itself in limbo. After a recent rally, it pulled back and then settled. At the moment, Bitcoin is at a crossroads, with market participants closely watching to see which direction BTC will take.

Last week, Bitcoin derivatives markets saw high trading volumes, unlike spot markets. However, this situation may soon change, potentially sending the leading cryptocurrency down to $100,000 or lower.

On Thursday, May 22, Bitcoin reached a dizzying high of $111,980 but was unable to sustain the record. Open interest (OI) rose significantly, and capital inflows into the derivatives market indicated a bullish sentiment.

BTC eyes new highs. Will the next rally follow?

Early this week, Bitcoin once again climbed and set a new all-time high, crossing the $111,600 mark before consolidating. Experts speculated that BTC might soon attempt another breakout past $111,000 and move higher.

Bitcoin began its climb from the $106,800 zone, later trading above $108,500 and the 100-hour simple moving average. The BTC/USD pair broke above a key bearish trendline with resistance at $107,800. According to analysts, the crypto asset may gain bullish momentum if it breaks above the $110,000 resistance level.

Bitcoin rises but fails to hold the line

After reaching a new record of $110,000, Bitcoin began a downward correction. BTC then tested support around $106,700 before rebounding. The asset moved above the $107,000 and $108,000 resistance levels.

At the start of the week, bulls pushed BTC above the 23.6% Fibonacci retracement level of the recent drop from the $111,983 high to the $106,672 low.

On Monday, May 26, Bitcoin was trading at $109,838 — above the previous $109,000 level and the 100-hour SMA. The current resistance sits around $110,000, which coincides with the 61.8% Fibonacci retracement of the same decline. The next key resistance could be around $111,800, and a close above that level might lead to further gains.

If that happens, BTC could test $113,000, and further bullish momentum could drive the price toward a new peak — $115,000.

Short-term pullback still a risk

Despite BTC's positive momentum, traders shouldn't overlook the possibility of a short-term pullback. One early warning sign is the decline in spot market demand.

Experts point out that the lack of spot demand suggests investors were hesitant to buy BTC above the $94,000–$96,000 range. The recent rally in derivatives markets has also added confusion. Analysts warn that deteriorating market conditions could lead to increased volatility and deeper corrections for BTC.

Bitcoin's performance remains unstable. Its recovery to $77,500 in March and further rise triggered short squeeze liquidations at $99,600, $108,000, and $113,000 — the first two levels have already been breached. The decline in spot demand confirms that while a market reset is possible, a rise to $113,000 is unlikely in the short term.

If BTC fails to break above the $111,000 resistance level, a new correction could begin. The nearest support lies near $108,000. The next level is seen at $106,500. Further losses may push BTC down to $105,000 and deepen the pullback. The key support now sits at $103,200. A break below it could trigger stronger bearish momentum.