Key takeaways:
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BTC is consolidating within a descending channel, but weak onchain activity suggests a lack of momentum.
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Rising Core inflation data (2.7%) and sticky price growth reduce the likelihood of Fed rate cuts, maintaining pressure on Bitcoin and risk assets.
Bitcoin (BTC) experienced notable price volatility at the start of the week, with sharp weekend and Monday swings leading to a significant shakeout in the derivatives market.
According to Glassnode, $28.6 million in long positions and $25.2 million in shorts were liquidated within 24 hours, reflecting a rare dual-sided flush that caught leveraged traders off guard and underlined the rapid shift in market sentiment.
BTC-denominated open interest dropped by ~7%, falling to 334,000 from 360,000 BTC. This sharp decline points to a temporary clearing of speculative leverage, suggesting that the market is in a reset phase.
While Bitcoin remains in the $100,000–$110,000 range, BTC’s onchain activity shows signs of cooling. Profitability metrics are fading, and user participation remains subdued, inferring a consolidation phase. Glassnode noted that the market appears to be digesting recent gains, likely waiting for a renewed surge in demand to fuel the next leg higher.
From a technical perspective, Bitcoin’s failure to sweep external liquidity near $109,000 has led to a gradual grind lower on the 4-hour chart. The current price action remains confined within a descending channel, with a key area of interest between $103,400 and $104,600.
This zone aligns with a daily fair value gap (FVG) and is supported by the 200-day exponential moving average (EMA), raising the potential for a bounce.
Considering BTC collects internal liquidity within this range, a bullish breakout above the descending channel to new highs remains a plausible scenario. However, until momentum builds and onchain activity revives, the broader market structure could likely stay in consolidation mode.
Related: Bitcoin long-term holders stack 800K BTC per month in record hodl run
Bitcoin faces headwinds as core inflation rises
A lack of bullish follow-through could mean that bearish momentum may persist into the coming week. Despite recent positive chatter around a potential interest rate cut, the latest inflation data suggests the Federal Reserve has little reason to shift its stance.
Personal Consumption Expenditures or PCE inflation, the Fed’s preferred metric, rose to 2.3%, which is in line with expectations, while Core PCE climbed to 2.7%, slightly above the projected 2.6%. This marks the first uptick since February 2025, indicating renewed inflationary pressure.
With price growth showing signs of stickiness, the Fed is likely to maintain its rate pause, keeping financial conditions tight, which is unfavorable for risk assets like Bitcoin.
Glassnode data further supports the cautious outlook, showing a minor $7.7 billion increase in spot volume during Q2. Transfer volume dropped 36% earlier in the quarter, highlighting a lack of speculative urgency.
Related: Bakkt Holdings files $1B shelf offering that could fuel Bitcoin buys
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.