BTC Consolidation Ongoing as Market Readies for Upcoming Major Shift

• The price of Bitcoin has been stabilizing between $94,000 and $100,000 since early February.
• Glassnode indicates a decline in capital inflows and diminishing derivatives activity, highlighting that short-term holder accumulation reflects challenging market dynamics.
• According to YouHodler’s Chief of Markets, Ruslan Lienkha, a prolonged environment of high interest rates increases selling pressure in the markets, causing Bitcoin to fluctuate sideways without a distinct trend.

Since February 5, Bitcoin (BTC) has been stabilizing between $94,000 and $100,000. Glassnode has noted a softening in capital inflows and a drop in derivatives trading activity, with short-term holder accumulation echoing difficult market conditions.

In a recent interview, YouHodler’s Chief of Markets, Ruslan Lienkha, shared with FXStreet that the ongoing high-rate scenario is putting upward pressure on selling, causing Bitcoin to trend sideways without a well-defined direction.

Bitcoin’s Consolidation Affects Broader Digital Asset Market

Bitcoin has been stable between $94,000 and $100,000 for several weeks, showing a relatively consistent trading pattern. At the time of this update on Thursday, Bitcoin is trading slightly above $97,000.

According to Wednesday’s Glassnode report, titled ‘Falling Tides’, “This stability contrasts with the wider digital asset market, where Ethereum, Solana, and various memecoins are experiencing significant downturns from their cyclical peaks.”

The report elaborates on the marked decrease in demand for memecoins, indicated by capital outflows, drastic price drops, and negative sentiment in the futures markets.

Market: Top assets price performance 30-day chart. Source: Glassnode

The report noted that the drop in perpetual futures funding rates further underscores the reduction in open interest, reflecting a growing bearish sentiment and the unwinding of leveraged positions, especially in riskier assets.

Market: Top assets funding rate chart. Source: Glassnode

For Bitcoin, a crucial level to monitor is the Short-Term Holder cost basis, which is around $92,500, as depicted in the following graph. This represents a pivotal point where many recent purchasers might see their investments fall into unrealized losses, potentially leading to further declines as panic sets in.

“The current phase of consolidation seems to be progressing towards its later stages, with the market gearing up for a trend in a singular direction once again,” stated a Glassnode analyst.

Bitcoin: Short-term on-chain cost basis bands (hourly) chart. Source: Glassnode

Bitcoin Price Slowdown Due to Inflation Anxiety and Tariff Tensions

In a report released on Wednesday, QCP emphasized that concerns regarding inflation are prevalent as tariff disputes heighten.

The report clarified that the only tariff currently imposed is a 10% charge on select goods from China. Proposed 25% tariffs on Canada and Mexico might be avoided with mutual agreement, while a planned increase in steel and aluminum tariffs from 10% to 25% is anticipated to take effect on March 12.

This week’s developments involving FTX’s repayments and the memecoin LIBRA controversy have added fuel to the ongoing market correction.

Moreover, the crypto market remains under pressure, with Solana preparing for a significant 30 million token release on March 1. Hedging activities linked to FTX-related SOL are impacting BTC and ETH values, amplifying overall market weakness. Meanwhile, Argentina’s memecoin surge, LIBRA, witnessed a dramatic $4 billion increase following government endorsement, only to plummet 89%, resulting in substantial losses for numerous investors.

Additionally, Micro Strategy (MSTR) made no Bitcoin purchases last week, marking the second instance where its holdings remained stable at 478,740 BTC. Nonetheless, the company intends to bolster its Bitcoin position via a private offering worth $2 billion in convertible senior notes.

“In spite of these challenges, Bitcoin demonstrates resilience around the $95k mark after dipping to $93,000 but is having difficulty breaking through higher levels due to a lack of short-term catalysts,” stated an analyst at QCP.

In an exclusive conversation, YouHodler’s Chief of Markets, Ruslan Lienkha, conveyed to FXStreet, “Inflation rates vary by region, but in the United States, inflation remains persistently elevated, recently rising back to 3%. With the Federal Reserve’s 2% target still seemingly far off, interest rates will likely stay high for a prolonged period.”

Lienkha further elaborated that this extended phase of high rates increases market selling pressure, complicating matters for equity indices attempting to gain traction. Consequently, Bitcoin continues to traverse within a sideways range without a definitive trend.

Bitcoin Price Outlook: Indecision Approaching Its Conclusion

Bitcoin’s price has been consolidating between $94,000 and $100,000 for over two weeks. On Tuesday, BTC declined to the lower edge of the consolidating range, only to experience a slight rise the following day. As of Thursday, it remains around $97,000.

If BTC manages to recover and surpass the upper limit of the consolidating range at $100,000, it may further extend its upward trajectory to retest its January 30 value of $106,457.

The Relative Strength Index (RSI) on the daily chart currently stands at 47, inching closer to its neutral level of 50 and showing an upward trend, indicative of mild momentum strength. For bullish momentum to maintain, the RSI should remain above its neutral point of 50.

The Moving Average Convergence Divergence (MACD) shows a coiling pattern, signaling indecision among traders as Bitcoin’s price consolidation continues.

BTC/USDT daily chart

However, should BTC break down and close below the lower boundary at $94,000, it may prompt further declines to test the psychologically significant level of $90,000.