Bitcoin has entered a period of consolidation after hitting a new all-time high. The macroeconomic environment remains positive: a stronger US dollar, falling bond yields, and stable liquidity. However, technical and on-chain indicators have weakened, and short-term upward momentum is fading. The price has traded below the 21-week moving average (a key demarcation between bull and bear markets) for two consecutive weeks. On-chain indicators such as "realized market capitalization" suggest a slowdown in new capital flows. The flash crash on October 11th exposed market fragility. News of tariffs on China triggered a panic-driven chain of liquidations, leading to the largest single-day drawdown in Binance's insurance fund history.

Sentiment cools: forced liquidation and on-chain capital flows shrink simultaneously

Following the flash crash, open interest (OI) continued to decline, with long-term holders cashing out in batches, keeping volatility compressed. Options market skewness turned negative, and demand for put protection increased significantly, reflecting traders' increased defensiveness against downside risk. On-chain data shows that the short-term holder realized price (STH) has fallen below $113,000, a range that historically triggers capitulation selling. Meanwhile, the "True Market Mean" (active investor price) remains around $81,000, providing key structural support for the market. Overall, the current phase appears more like a natural recovery following the deleveraging of high leverage rather than the beginning of a systemic decline.

Macroeconomic stability with pressure: caution first, waiting for liquidity recovery signals

While the macroeconomic environment remains supportive—declining bond yields and weakening employment data provide room for the Federal Reserve to continue cutting interest rates—slowing growth momentum is weighing on risky assets. Bitcoin is sensitive to macroeconomic fluctuations, and its recent performance reflects a mismatch between sentiment and liquidity. With prices currently trading below its 21-week moving average, a defensive strategy is recommended. Leveraged long positions are advised against for now. A more opportune time to reposition long positions would be to wait for on-chain liquidity to recover or for macroeconomic stabilization signals to emerge.

Overall, the current consolidation is more like a mid-cycle cooling down within a long bull market. Structural support remains intact, and institutional participation and the depth of derivatives continue to provide underlying resilience for the market. While risk management should be prioritized in the short term, long-term logic still points to the next upward trend, supported by more mature and institutionally robust structures.

Some of the above views are from Matrix on Target. Contact us to obtain the full Matrix on Target report.

Disclaimer: Markets are risky, so invest with caution. This article does not constitute investment advice. Digital asset trading can be extremely risky and volatile. Investment decisions should be made after carefully considering your individual circumstances and consulting a financial professional. Matrixport is not responsible for any investment decisions based on the information provided.