Bitcoin has entered a phase of consolidation after reaching a historical high. The macro environment remains relatively friendly: the US dollar is strengthening, bond yields are declining, and liquidity remains stable; however, technical and on-chain indicators are weakening in tandem, and short-term upward momentum is diminishing. The price has been running below the 21-week moving average for two consecutive weeks (a key boundary between bull and bear markets), and on-chain metrics such as "realized market cap" indicate a slowdown in new capital momentum. The flash crash on October 11 exposed market vulnerabilities, triggering panic-induced liquidations due to tariff news with China, leading to Binance's insurance fund recording its largest single-day drawdown in history.

Cooling Sentiment: Liquidations and On-Chain Capital Flows Contracting Simultaneously

After the flash crash, open interest (OI) has continued to decline, with long-term holders cashing out in batches, and volatility remains compressed. The skew in the options market has turned negative, with a significant increase in demand for put protection, reflecting traders' heightened defensive stance against downside risks. On-chain data shows that the short-term holder realized price has been breached, around $113,000, which is a range that historically triggers "surrender-style sell-offs." Meanwhile, the "True Market Mean" (active investor price) remains around $81,000, providing key structural support for the market. Overall, the current phase resembles a natural recovery after high leverage unwinding rather than the beginning of a systemic decline.

Macro Stability with Pressure: Caution First, Awaiting Liquidity Recovery Signals

Although the macro environment still provides support: the decline in bond yields and weakening employment data offer space for the Federal Reserve to continue cutting rates, the slowdown in growth momentum puts pressure on risk assets. Bitcoin is sensitive to macro changes, and recent movements reflect a mismatch between sentiment and liquidity. The current price is running below the 21-week moving average, and the strategy should focus on defense, avoiding leverage for long positions until on-chain liquidity recovers or macro stabilization signals appear, which would be a better time to reposition for bullishness.

Overall, the current consolidation resembles a mid-cycle cooling within a long-term bull market. Structural support has not been broken, and institutional participation and the depth of derivatives still provide underlying resilience to the market. In the short term, risk management should take precedence, but the long-term logic still points to the next upward movement being more mature and supported by institutional backing.

Some of the views above are from Matrix on Target, Contact Us_ to obtain the complete report from Matrix on Target._

Disclaimer: The market carries risks, and investment should be approached with caution. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.

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