Bitcoin (BTC) recently faced a significant rejection at the $108,000 resistance level as the third quarter (Q3) commenced, prompting market analysts to advise caution for the coming months. Despite achieving its highest monthly close in history around $107,140 at the end of the second quarter and June, the flagship cryptocurrency initiated July with a pullback, touching a one-week low of $105,623.

According to analyst Rekt Capital, this current price action suggests a post-breakout retest is underway, which, if successful, could bolster Bitcoin’s position for a subsequent upward movement. Rekt Capital had previously emphasized the necessity for Bitcoin to secure a weekly close above the $104,400 support level. Reclaiming this crucial area is vital for solidifying its price recovery and establishing a strong base for what could become BTC’s second Discovery Uptrend. The latest weekly close indicates Bitcoin is indeed set for another retest following its breakout.

Further analysis from Rekt Capital highlights that over the past 40 days, BTC successfully broke out of two distinct 2-week downtrends. However, it concurrently encountered a critical rejection from the 6-week downtrend, precisely around the $108,000 mark. Sjuul from AltCryptoGems underscored the importance of this rejection, stressing that bulls must intervene swiftly to prevent a substantial price dip. Sjuul stated that a robust bounce from the pivotal $106,000-$104,000 support and resistance zone is imperative, a level that Bitcoin has momentarily managed to hold. Failure to maintain this area could trigger a more significant pullback, potentially leading to a drop towards the Macro support range of $101,000 to $102,000. A notable gap exists between the current support area and the Macro support, which emerged during the recent price recovery.

Concerns intensify for Q3, as Sjuul warned that below the $101,000 support, there is minimal defense against a deeper fall. This sentiment is compounded by the historical trend of Bitcoin’s quarterly returns for Q3, which have generally been unfavorable, adding an extra layer of caution to the current market outlook. Daan Crypto Trades echoed this sentiment, pointing out that historical data consistently shows Q3 as the slowest period for both Bitcoin and Ethereum (ETH), characterized by decreased market activity, trading volume, and liquidity during the summer months. As a new quarter and month begin, Bitcoin is anticipated to experience a “choppy start,” yet it continues to consolidate within its established range and descending channel. Investors are advised to allow the situation to unfold and await clear confirmations of the market’s direction for the remainder of the month.

A potent warning signal has also emerged from analyst Ali Martinez, concerning an indicator that has historically predicted “every major Bitcoin crash.” Martinez reported that the Tom Demark Sequential indicator, known for preceding violent pullbacks, has flashed a sell signal on the quarterly timeframe. This very signal previously appeared in 2015 and 2018, with BTC subsequently experiencing retracements exceeding 75% and 85% respectively. If historical performance holds true, Martinez forecasted a potential drop for BTC to the $40,000 mark this quarter. As of this report, Bitcoin is trading at $105,901, reflecting a 1.16% decline within the daily timeframe.