Bitcoin is experiencing a consolidation phase below its all – time high due to profit – taking and tariff risks, which have cooled its price momentum. Here are the details:
Background
Bitcoin recently reached a record high of $111,880. It had rebounded more than 50% from the 32% decline since its previous all – time high in January, driven by strong spot demand, steady exchange – traded fund (ETF) inflows, soaring spot – market participation, and positive net realized – market – cap growth.
Impact of Profit – taking
Realized profits of short – term holders: Short – term holders (STH) have booked substantial profits. In the past 30 days, they realized $11.4 billion of profit, compared with just $1.2 billion in the prior month. The STH realized profit / loss ratio surged to a level typically associated with late – stage rallies. Heavy profit – taking by STH could cap the upside if new capital does not arrive to absorb the selling pressure.
Market indicators: Futures funding flipped negative during the pullback, and open interest fell as forced sellers exited positions. Exchange data shows reduced incremental buying, and perpetual basis rates remain subdued. These indicate that traders quickly reduced directional exposure and that the market is in a consolidation state.
Impact of Tariff Risks
US President Donald Trump’s threat to impose 50% tariffs on EU imports triggered a risk – off move across global markets. This macro – shock and the elevated leverage in perpetual futures sparked cascading liquidations, pushing the bitcoin price below the $107,000 threshold within 36 hours.
Outlook
Amid the macro uncertainty and profit – taking risks, bitcoin is expected to oscillate between last week’s $106,000 intraday low and the $111,000 area until fresh spot demand absorbs the overhead supply or a deeper reset draws in more buyers. A period of sideways trading or mild retracement would reinforce the market structure by flushing out excess leverage and allowing spot demand to re – establish control. Such consolidation has historically preceded fresh advances. However, the depth of any pullback depends on macro events, including further clarity on the proposed tariffs and whether ETF allocations resume at a recent clip.
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