Bitcoin Futures Power Index Hits Neutral Zone After Months Of Bullish Readings – Details

Bitcoin is once again challenging the $120,000 resistance level after a stretch of massive volatility for BTC and strong performance from altcoins. While the flagship cryptocurrency has yet to decisively break above its current range resistance, Ethereum has been leading the broader market with an impressive uptrend since April, gaining over 230% and drawing strong institutional interest.

The battle at $120K comes amid shifting sentiment in the derivatives market. Data from CryptoQuant shows that in August, the Bitcoin Futures Power index dropped to the zero mark, ending a series of positive readings that had previously accompanied BTC’s rally. According to top analyst Axel Adler, this index, which measures the combined influence of open interest, funding rates, and taker order imbalances, reflects the cooling momentum in the futures market.

The next move could be pivotal, as Bitcoin’s ability—or failure—to push through $120K will likely set the tone for the remainder of the quarter, especially as altcoins continue to show signs of strength and sector rotation intensifies.

Adler notes that Bitcoin’s current positioning near its all-time high comes with a notable shift in derivatives sentiment. Adler warns that when the Bitcoin Futures Power index transitions from neutral into negative territory, it has historically coincided with market corrections. With BTC still holding close to record levels, the current reading increases the probability of such a shift.

The broader market remains hot, fueled by significant capital inflows and heightened trading activity. However, some analysts are beginning to speculate that Bitcoin could face a short-term cooldown as momentum moderates and the derivatives market signals caution. While spot prices have been resilient, the loss of clear bullish signals in futures data has traders watching closely for signs of waning demand.

At the same time, Ethereum’s explosive rally—up over 200% since April—has shifted market dynamics into a new phase where leadership is no longer solely dictated by Bitcoin. ETH’s strong fundamentals, reduced exchange supply, and institutional accumulation have drawn capital and attention away from BTC, creating a more balanced market structure. This diversification of momentum could mean that even if Bitcoin stalls, the overall crypto market retains bullish energy driven by large-cap altcoins.

On the 4-hour chart, Bitcoin (BTC) is trading at $119,967, posting a modest gain of 0.34% as it approaches the critical $120,000 resistance level. The recent rally has brought BTC closer to the all-time high of $123,217, which remains a significant hurdle for bulls to clear.

Price action shows a strong recovery from early August lows near $114,000, with BTC now trading above its key moving averages — the 50 SMA ($117,269), 100 SMA ($116,893), and 200 SMA ($117,475). This alignment indicates a bullish short-term structure, with the moving averages potentially acting as dynamic support if a pullback occurs.

The market is currently consolidating just below resistance, suggesting a potential breakout attempt if buying momentum strengthens. However, the repeated rejections near $123K in recent months highlight the importance of this zone as a major supply area.

A decisive close above $123,217 would likely trigger momentum buying and open the path toward new price discovery. Conversely, failure to break higher could lead to a retracement toward the $117K support cluster, where the 50, 100, and 200 SMAs converge.

Featured image from Dall-E, chart from TradingView