Matrixport Research: Bitcoin is in a phase of consolidation, short-term momentum is weakening but structural support remains

Bitcoin has entered a phase of consolidation after hitting a historical high. The macro environment remains relatively friendly: the dollar is strengthening, bond yields are declining, and liquidity remains stable; however, technical and on-chain indicators are weakening in tandem, with short-term upward momentum 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 selling due to tariff news with China, leading to the largest single-day drawdown in Binance's insurance fund.

Sentiment Cooling: Liquidations and On-Chain Capital Flows Contracting

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, 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 correction after high leverage unwinding rather than the beginning of a systemic decline.

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

Although the macro environment still provides support: falling bond yields and weakening employment data offer room 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 along with derivatives depth still provides 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.

The above views are partly derived from Matrix on Target. Contact us for the complete report on 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.