Bitcoin surged over 4% Monday to test the $110,500 resistance level, gaining nearly $5,000 in a single trading session as institutional momentum and improving market sentiment drive the leading cryptocurrency toward its May 22 all-time high of $112,000.
Despite a modest Tuesday correction of under 1%, with BTC currently trading around $108,000, market structure remains bullish as Ethereum's Layer 2 ecosystem reaches a significant milestone – collective TVL (Total Value Locked) of $10 billion across all scaling solutions.
Layer 2 Landscape Shifts as Base Takes Lead
Coinbase's Base blockchain has emerged as the dominant Layer 2 platform with $3.54 billion in TVL, capturing the largest market share among Ethereum scaling solutions. The achievement marks a remarkable rise for the relatively new platform, which launched to public mainnet access just over a year ago.
The broader Layer 2 ecosystem experienced a slight 1.9% daily decline in TVL, reflecting general market volatility rather than fundamental weakness. Historical data shows Layer 2 TVL has surged 333% year-over-year from approximately $4.8 billion in early 2024, demonstrating sustained adoption of scaling solutions.
Key Layer 2 metrics:
- Base: $3.54 billion TVL (market leader)
- Arbitrum One: Maintains 66% historical dominance
- Optimism: Controls over 20% market share
- Total L2 TVL: $10 billion (-1.9% daily change)
Bitcoin Momentum Driven by Multiple Catalysts
Bitcoin's approach to $110,000 reflects convergence of several bullish factors, building on momentum from the recent halving event:
- Institutional Accumulation: Beyond Metaplanet's 1,005 BTC purchase today, corporate treasuries continue expanding Bitcoin allocations
- ETF Inflows: Sustained demand through spot Bitcoin ETF products
- Technical Breakout: Clear break above $105,000 resistance with volume confirmation
- Macro Environment: Weakening dollar index supporting risk assets
Trading volume exceeded 30% above 30-day averages during Monday's rally, indicating strong conviction behind the move. Order book depth shows significant resistance at $112,000 (previous ATH) and psychological $115,000 level.
Ethereum Holds Ground Above $2,500
Ethereum maintained support above $2,500 despite a 0.95% intraday decline to $2,429.83. The relative underperformance versus Bitcoin pushed the ETH/BTC ratio to 0.0225, near multi-month lows.
However, Ethereum's fundamental metrics remain robust:
- Layer 2 adoption reducing mainnet congestion
- DeFi TVL stabilizing after recent volatility
- Staking participation rate at all-time highs
- Developer activity metrics trending positive
Market Risks and Considerations
While sentiment appears overwhelmingly bullish, several risk factors warrant attention:
- Security Concerns: H1 2025 saw $2.1 billion in crypto hacks, with North Korean groups responsible for $1.6 billion
- Regulatory Uncertainty: Despite GENIUS Act progress, enforcement details remain unclear
- Leverage Metrics: Funding rates approaching overheated levels on perpetual futures
- Correlation Risk: Traditional market volatility could trigger crypto selloffs
Technical Outlook and Key Levels
Bitcoin's immediate resistance sits at $110,500, with breakthrough targeting the $112,000 all-time high. Support levels include $105,000 (recent breakout point) and $102,000 (20-day moving average).
For Ethereum, reclaiming $2,600 would signal renewed strength, while failure to hold $2,400 could see retest of $2,200 support zone.
The cryptocurrency market's resilience near multi-month highs, combined with expanding Layer 2 adoption and regulatory progress, suggests the current rally has fundamental support beyond short-term speculation. However, traders should remain vigilant for volatility as Bitcoin approaches critical resistance levels that could determine whether new all-time highs materialize in the near term.