Bitcoin is currently trading at a critical support zone of around $104,000. Amidst weakening on-chain activities and ongoing inflation concerns, price movement is in a consolidation phase.
Recent liquidations in both long and short positions in Bitcoin futures indicate that market volatility is rising and there are rebalancing acts in speculative leverage.
According to COINOTAG's report, the rise of the Core Personal Consumption Expenditures (PCE) inflation rate to 2.7% is putting downward pressure on Bitcoin and risky assets in general by decreasing expectations for Fed interest rate cuts.
As Bitcoin consolidates around $104,000 amidst weakening on-chain indicators and a rising core inflation environment, a cautious atmosphere and ongoing price stability signals are observed in the market.
Bitcoin's Consolidation at $104,000: The Market is in Search of Balance and Decline in On-chain Activity.
Last week, the price of Bitcoin went through a distinct consolidation phase, moving between $103,400 and $104,600 within a downward channel. This support range overlaps with the daily price gap and the 200-day exponential moving average (EMA), creating a technically sound balance point. However, metrics such as decreasing user participation and weakening profit indicators indicate that momentum is weakening. Liquidations of long and short positions above $53 million show that volatility in the market is rising and adjustments in leverage are ongoing. This process indicates that the market is digesting its recent gains while waiting for new catalysts to emerge.
Technical Analysis and Market Sentiment Support Consolidation.
Technical indicators show that after Bitcoin failed to break the liquidity zone around $109,000, it formed a downward channel in the 4-hour chart. The accumulated liquidity in the $103,400-$104,600 range indicates that investors are starting to take positions for a potential recovery; however, the lack of volume and on-chain activity limits the optimism in the market. Participants need to closely monitor the 200-day EMA; as a break below this level signals further declines, a clear breakout above may indicate a return of the bull market. For now, the market is trending sideways and consolidating, with a cautious and careful risk-taking approach prevailing among investors.
Inflation Pressures and Fed Policies Continue to Weigh on Bitcoin.
Macroeconomic data continues to pose a significant barrier to Bitcoin's price. The rise of core PCE inflation to 2.7% increases the likelihood of the Fed postponing interest rate cuts and results in tighter financial conditions. This situation raises the cost of non-yielding assets like Bitcoin in a high-interest environment, reducing demand for risky assets. The likelihood of the Fed maintaining its current monetary policy stance makes it difficult for Bitcoin to break out of its current consolidation period.
On-chain Volume Data Shows the Market is Acting Cautiously.
Glassnode data reveals that total spot trading volume recorded a limited increase of $7.7 billion in the second quarter of 2025, but there has been a significant 36% decline in transfer volume since the beginning of the quarter. This suggests a decrease in speculative urgency within the market and that investors prefer to maintain their positions. The declining transfer volume indicates that large-scale movements have remained limited and supports overall market consolidation. These trends indicate that on-chain activities are critical indicators for future price movements and market sentiment.
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