Bitcoin Faces Sharp Derivatives Shakeout Amid Market Consolidation

Bitcoin experienced significant volatility at the start of the week, leading to a dramatic shakeout in the derivatives market and underscoring a growing phase of market uncertainty. On-chain analytics firm Glassnode reported that within 24 hours, long positions worth $28.6 million and short positions worth $25.2 million were liquidated. This rare two-sided flush left many leveraged traders caught off guard and highlighted the fragility of current sentiment. Speculative Leverage Clears as Open Interest Falls The volatility also led to a 7% decline in BTC-denominated open interest, which dropped from 360,000 BTC to around 334,000 BTC. This decline indicates a reset in speculative leverage, potentially paving the way for a more stable market structure. Bitcoin’s price remained within the $100,000 to $110,000 range, with reduced on-chain activity hinting at a consolidation period rather than the beginning of a new rally. Glassnode noted that both profitability metrics and user participation are currently subdued. Technical Indicators Point to Key Support Levels From a technical viewpoint, Bitcoin’s failure to surpass external liquidity near $109,000 triggered a gradual decline in the short-term trend. On the 4-hour chart, BTC remains trapped within a descending channel, with a key support zone identified between $103,400 and $104,600. This area coincides with a daily fair value gap (FVG) and is backed by the 200-day exponential moving average (EMA), raising the likelihood of a short-term bounce if momentum returns. Market Awaits Breakout as Bullish Momentum Stalls If BTC can collect internal liquidity within this critical zone, a bullish breakout above the descending channel remains plausible. However, the current lack of trading momentum and subdued on-chain activity suggests that the market could remain range-bound until stronger demand emerges. Inflation Concerns Weigh on Sentiment Adding to the uncertainty are macroeconomic headwinds. The latest Personal Consumption Expenditures (PCE) inflation data, the Federal Reserve’s preferred gauge, showed an increase to 2.3%, matching expectations. However, Core PCE rose to 2.7%, slightly above forecasts. This marked the first increase in core inflation since February 2025, reinforcing the Fed’s cautious stance. As a result, expectations of an imminent interest rate cut have been tempered. Tight Financial Conditions Create Pressure for Bitcoin With inflation proving sticky, the Fed is unlikely to lower interest rates soon, keeping financial conditions tight. This environment is generally unfavorable for risk assets like Bitcoin. Glassnode’s quarterly data further highlights the tepid sentiment, with spot trading volume rising only slightly by $7.7 billion in Q2, while transfer volumes declined 36% earlier in the quarter. This combination of macroeconomic pressure and market consolidation suggests that Bitcoin’s next move remains uncertain.

Source: CryptoIntelligence