After reaching its highest level this year, Bitcoin has entered a more delicate phase: the price range is narrowing, volatility is decreasing, and market sentiment has shifted from "excitement" to "wait-and-see." This is not the arrival of a bear market, but rather a natural slowdown in the cyclical pace. The Federal Reserve has repeatedly reiterated that it will not rush to cut interest rates, the dollar has stabilized and rebounded, global liquidity is tightening marginally, the early inflow benefits from ETFs have been largely digested, and new buying has yet to take over. In the short term, Bitcoin is under both macroeconomic pressure and structural adjustments, and the market is more like a "cooling-down process."

Capital outflows and market returns to rationality: Liquidity is tightening.

On a macro level, the U.S. Treasury has withdrawn over $800 billion through its General Account (TGA), compressing liquidity in the banking system. Federal Reserve officials have adopted a more hawkish tone, narrowing expectations for interest rate cuts from three this year to only about 1.8. This means that the key liquidity environment supporting Bitcoin is weakening at the margin.

On-chain and holding data also confirm this: long-term holders are gradually taking profits, ETFs saw a net outflow of nearly $1.9 billion, and native funds are actively deleveraging, indicating a significant cooling in market positions. Historical patterns show that when prices are trading below key cost levels, the market often enters a "turnover and correction period"—not the start of a decline, but rather a consolidation before an upward move.

Dollar rebound and cooling risk appetite: lack of short-term catalysts, patience is the best strategy.

The US dollar index has rebounded from its lows, continuing to exert downward pressure on Bitcoin. In the past five similar phases, Bitcoin's average correction over 1 to 6 months has ranged from 11% to 31%. Meanwhile, Powell's latest remarks have dampened market expectations for further easing, leading to a cooling of risk appetite. This is evident in the decline in volatility: Bitcoin's annualized volatility has fallen from 70% to 30%.

The disappearance of high volatility signifies that the market is entering a more stable phase. For long-term investors, this period is more suitable for observation and positioning than chasing rallies. If a liquidity inflection point occurs before December (such as the Federal Reserve signaling new easing or TGA funds flowing back into the market), Bitcoin may resume its upward trend. Until then, controlling position size and maintaining flexibility are wiser strategies.

The current consolidation is not a prelude to a bear market, but rather a "reset period" within a long-term bull market. Institutional funds have not withdrawn, and structural portfolio turnover is underway. In the crypto market, patience itself is a form of alpha. Right now, it's not about who dares to use leverage, but about who can maintain conviction and discipline during this quiet period.

The above viewpoints are from Matrix on Target. Contact us to obtain the full Matrix on Target report.

Disclaimer: Investing in the market involves risks; please exercise caution. This article does not constitute investment advice. Digital asset trading can be extremely risky and volatile. Investment decisions should be made after careful consideration of your individual circumstances and consultation with a financial professional. Matrixport is not responsible for any investment decisions made based on the information provided in this content.