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Bitcoin is currently trading near a critical support level around $104,000, signaling a phase of price consolidation amid weakening onchain activity and persistent inflation concerns.
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The recent liquidation of both long and short Bitcoin futures positions underscores heightened market volatility and a resetting of speculative leverage.
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COINOTAG reports that rising Core PCE inflation to 2.7% is dampening expectations for Federal Reserve rate cuts, maintaining downward pressure on Bitcoin and broader risk assets.
Bitcoin consolidates near $104K amid weak onchain signals and rising Core inflation, signaling cautious market sentiment and potential for continued price stability.
Bitcoin Consolidation Near $104,000 Reflects Market Reset and Onchain Weakness
Bitcoin’s price action over the past week has been characterized by consolidation within a descending channel, with key support identified between $103,400 and $104,600. This range coincides with a daily fair value gap and the 200-day exponential moving average (EMA), which together provide a technical foundation for potential price stabilization. However, the subdued onchain metrics, including declining user participation and fading profitability indicators, suggest that momentum remains muted. The recent liquidation event, which saw over $53 million wiped out in both long and short futures positions, highlights the market’s heightened sensitivity to volatility and the ongoing deleveraging process. This environment points to a cautious market digesting recent gains while awaiting fresh catalysts to reignite upward momentum.
Technical Indicators and Market Sentiment Signal Consolidation Phase
From a technical standpoint, Bitcoin’s inability to break above the $109,000 liquidity zone has resulted in a gradual price decline within the descending channel on the 4-hour chart. The accumulation of internal liquidity within the $103,400–$104,600 band suggests that traders are positioning for a potential bounce, yet the lack of strong volume and onchain activity tempers bullish expectations. Market participants should monitor the 200-day EMA closely, as a decisive breakout above the descending channel could signal a shift toward renewed bullish sentiment. Until then, the prevailing market structure favors sideways movement and consolidation, reflecting uncertainty among investors and a cautious approach to risk exposure.
Inflationary Pressures and Fed Policy Continue to Weigh on Bitcoin
The broader macroeconomic context remains a significant headwind for Bitcoin’s price trajectory. Recent data indicates that Core Personal Consumption Expenditures (PCE) inflation rose to 2.7%, surpassing forecasts and marking the first increase since early 2025. This stickiness in inflation metrics reduces the likelihood of imminent Federal Reserve rate cuts, thereby sustaining tighter financial conditions. Such an environment is typically unfavorable for risk assets, including cryptocurrencies, as higher interest rates increase the opportunity cost of holding non-yielding assets like Bitcoin. The Fed’s likely decision to maintain its current policy stance underscores the challenges Bitcoin faces in breaking out of its consolidation phase amid persistent macroeconomic uncertainty.
Onchain Volume Trends Reflect Market Caution
Supporting the cautious outlook, Glassnode data reveals a modest $7.7 billion increase in spot trading volume during Q2, contrasted by a 36% decline in transfer volume earlier in the quarter. This divergence indicates a reduction in speculative urgency and a preference for holding rather than active trading among market participants. The subdued transfer volume suggests that investors are adopting a wait-and-see approach, limiting large-scale movements on the blockchain and contributing to the overall consolidation narrative. These trends emphasize the importance of monitoring onchain activity as a barometer for future price action and market sentiment.
Conclusion
Bitcoin’s current consolidation near the $104,000 support level reflects a market in transition, balancing technical support with macroeconomic headwinds. The interplay of weakening onchain metrics, significant futures liquidations, and persistent inflationary pressures creates an environment of cautious investor sentiment. While the potential for a bullish breakout exists, particularly if Bitcoin can reclaim the descending channel, the prevailing conditions suggest continued price stability and consolidation in the near term. Investors should remain attentive to inflation data and onchain activity as key indicators for the next directional move in Bitcoin’s price.
