Bitcoin Faces Possible Near-Term Correction Amid Profit Taking and ETF Inflows Slowdown

• Bitcoin experienced a notable 4% correction to $116,000 amid $3.5 billion in profit taking and significant liquidations, signaling a market cooldown after recent highs.

• Exchange inflows surged by 33%, intensifying sell-side pressure, while Bitcoin ETFs continued to attract substantial investments, though not enough to counterbalance market volatility.

• According to COINOTAG, the Bitcoin RSI reached 82.25, indicating overbought conditions and suggesting a near-term market consolidation phase.

Bitcoin’s 4% drop amid $3.5B profit taking and high liquidations highlights market cooling; ETF inflows persist but macroeconomic factors remain key drivers.

Profit Taking and Liquidations Trigger Bitcoin Market Correction

The recent market pullback was primarily driven by large-scale profit realization and leveraged position liquidations. Long-term holders accounted for 56% of the $3.5 billion in realized Bitcoin profits, marking the most significant single-day profit-taking event since April 2025. This surge in sell-side activity was accompanied by a 33% increase in exchange inflows, reaching 148.25 billion in 24-hour trading volume, which intensified downward pressure on prices.

Additionally, over $142 million in Bitcoin leveraged positions were liquidated within 24 hours, with long positions constituting 88% of these losses. The failure of Bitcoin to maintain its $118,000 support level triggered this unwinding, while perpetual funding rates remained slightly positive at +0.01%, indicating the potential for further position adjustments.

Technical Indicators Signal Overbought Market Conditions

Technical analysis reveals that the crypto market is currently overextended. The Relative Strength Index (RSI) for Bitcoin hit 82.25, the highest since November 2024, signaling overbought conditions and a likely short-term cooling period. Bitcoin’s dominance increased to 63.39%, reflecting a shift toward more established assets amid market uncertainty.

Despite the correction, the market found support at the 7-day simple moving average of $3.65 trillion in total capitalization. However, the inability to sustain levels above the 23.6% Fibonacci retracement at $3.59 trillion suggests a technical rejection, reinforcing the cautious sentiment among traders.

ETF Inflows Continue but Fail to Offset Market Pressure

Bitcoin ETFs remain a positive influence, with 8,958 BTC valued at $1.08 billion flowing into funds on July 14. BlackRock’s iShares ETF led these inflows, adding 8,086 BTC and increasing its holdings to 714,094 BTC. Ethereum ETFs also attracted significant capital, with 68,957 ETH (approximately $208.94 million) entering funds, primarily driven by BlackRock’s iShares ETH ETF.

Nevertheless, these inflows were insufficient to counterbalance the effects of profit taking and leveraged position liquidations. The altcoin market showed mixed performance, with tokens like HYPE retreating after reaching record highs, while smaller-cap assets such as CROSS, BGSC, and VELVET outperformed, indicating selective investor interest.

Market Outlook: Near-Term Reset Amid Macro Uncertainty

The current correction reflects a necessary market reset following Bitcoin’s impressive 39% rally over the past 90 days. Despite ongoing ETF support and increased stablecoin inflows, short-term caution prevails. Liquidations totaling $494.7 million within 24 hours and a Fear & Greed Index reading of 73 underscore persistent greed but also heightened volatility.

Given the strong correlation of 0.84 between crypto markets and the Nasdaq, upcoming U.S. Consumer Price Index (CPI) data is poised to play a pivotal role in shaping market direction. Investors are advised to monitor macroeconomic indicators closely as they navigate this phase of consolidation.

Conclusion

The recent Bitcoin correction highlights the interplay between profit taking, leveraged liquidations, and technical overextension. While ETF inflows provide underlying support, the market remains sensitive to macroeconomic developments, particularly U.S. inflation data. Traders should adopt a measured approach, recognizing that this pullback may serve as a healthy consolidation before the next phase of growth.