Bitcoin is coiling at the edge of a move that could reset the week: price is pinned near $108K, volatility is compressing, and Washington is injecting fresh uncertainty. With the U.S. government shutdown dragging into week four, Treasury yields easing, and crypto executives clashing with lawmakers over DeFi oversight, the market’s compression looks primed to snap—likely in days, not weeks.

What’s happening now

Equities turned risk-off as export worries and weak earnings weighed on sentiment, while yields dipped to ~3.95%. Bitcoin slid from $112K to $108K, trading between the middle and lower Bollinger Bands. The squeeze is narrowing, a classic prelude to a volatility burst. Short-term bias stays bearish below the 20-day SMA and ~$114K 50-day SMA.

Why this matters to traders

Policy and macro are now the main catalysts. A tougher DeFi stance from Senate Democrats could chill speculative inflows; credible bipartisan progress on exchange and stablecoin rules could invite fresh capital. Pair that with CPI risk and a shutdown resolution, and you have a binary tape where levels matter more than narratives.

Key levels to watch

• Support: $106K–$105K (lower Bollinger), then $101K and the psychological $95K.
• Resistance: $111K–$112K (20-day SMA), then $115K and $118K. A reclaim of ~$114K (50-day SMA) shifts bias to bullish.

Trade triggers (if/then)

• IF 4H close above $112K → THEN momentum long toward $115K–$118K; invalidate on a return below $111K.
• IF daily close above $114K (50-DMA) → THEN swing extension toward $120K.
• IF 1H close below $105K → THEN momentum short targeting $101K, stretch to $95K; invalidate on quick reclaim of $106K.
• Range tactics while price holds $106K–$112K: fade extremes with tight risk; avoid overexposure during the squeeze.

Macro and policy catalysts

• Shutdown path: resolution = liquidity relief; prolongation = heavier risk-off.
• Regulation: hawkish DeFi language → curb leverage appetite; bipartisan framework → confidence boost for institutions.
• CPI/Fed tone: softer inflation and dovish hints can fuel a relief rally; upside surprise pressures risk assets.

Actionable game plan

• Set alerts at $105K, $107K, $111K, $114K; trade the break, not the guess.
• Size down until post-breakout confirmation; expect slippage and wicks in a squeeze.
• Use bracket orders around key levels and predefine invalidation to avoid chasing.
• Monitor funding and open interest for one-sided positioning—fade extremes after the first impulse exhausts.

Risk management in a squeeze

• Place stops beyond liquidity zones (not at obvious round numbers).
• Avoid adding to losers; let confirmation (close above/below) trigger entries.
• Respect time stops—if the move doesn’t follow through within your setup window, exit.

Bottom line

This is a trigger-driven market: above $112K invites a fast test of $115K–$118K, below $105K exposes $101K–$95K. Focus on closes, not intraday noise, and let macro and D.C. headlines set the direction while your levels set the trade.

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