Bitcoin drops below $109k as bulls fail to bring volume

The key takeaways 

•  BTC has been consolidating in a channel descending, however weak onchain activity indicates a lack momentum.

• The Fed’s rate cut is unlikely to occur due to the rising core inflation (2,7%) and price increases that are sticking. This puts pressure on Bitcoin as well as risky assets.

BitcoinBTCThe derivatives markets were shaken by the price fluctuations at the beginning of this week.

As per GlassnodeThe market changed rapidly in 24 hours. $28,6 Million in longs and $25,2 million in shorts positions were liquidated. This was a rare double-sided move that caught many leveraged investors off guard.

The open interest expressed in BTC dropped by approximately 7% from 360,000 BTC to 334,000 BTC. This rapid decline indicates that speculative leverage has been temporarily cleared, and the market may be in a reset stage.

The following are some of the ways to get in touch with us Bitcoin remains in the $100,000–$110,000 range, BTC’s onchain activity shows signs of cooling. Indicators of profitability are declining, while the level of user engagement remains low, indicating a consolidation stage. Glassnode stated that recent gains appear to be being digested by the market, which is likely waiting on a new surge of demand to drive the next leg up.

The failure of Bitcoin to attract external liquidity to $109,000, from a technical standpoint, has caused a slow but steady decline in the price on the 4-hour graph. Price action is still confined to a downward channel with an area of importance between $103,400-$104,600.

The zone is aligned to a fair-value gap daily (FVG), and the moving average exponential (EMA) of 200 days supports it, increasing the possibility for a jump.

BTC’s ability to collect internal liquidity is a factor that makes a breakout bullish above the descending channel and new highs plausible. The broader market structure may remain in consolidation until the momentum is built and onchain activity resumes.

Related: Bitcoin long-term holders stack 800K BTC per month in record hodl run

Bitcoin’s price is under pressure as inflation increases

Lack of follow-through on bullish sentiment could lead to a bearish trend continuing into next week. The latest inflation figures suggest that the Federal Reserve is unlikely to change its position despite recent chatter about a possible interest rate reduction.

The preferred Fed metric of Personal Consumption Spending or PCE inflation rose to 2,3%. This is on par with the expectations. Core PCE increased to 2.7% which was slightly higher than the expected 2.6%. It is the first rise since February 20,25 and indicates renewed inflationary tension.

The Fed will likely maintain the rate freeze, which means that financial conditions are tight and unfavorable to risky assets such as Bitcoin.

Glassnode data Further supporting the cautious outlook is a small increase of 7.7 billion dollars in Q2. In the early part of the quarter, transfer volumes dropped by 36%. This shows a lack in speculative drive.

Related: Bakkt Holdings files $1B shelf offering that could fuel Bitcoin buys

This article contains no investment recommendations or advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.