Bitcoin is undergoing a significant short-term price correction, driven by persistent inflation worries and uncertainty surrounding Federal Reserve policy. The cryptocurrency’s price has declined approximately 5%, accompanied by notable exchange inflows signaling investor profit-taking.
Recent economic data underscores the inflationary pressure, with June’s U.S. Consumer Price Index (CPI) rising to 2.7%, an increase from the previous 2.4%. This uptick has negatively impacted risk assets, including cryptocurrencies.
Technical indicators further support the potential for continued downward movement. Bitcoin’s Market Value to Realized Value (MVRV) ratio exceeding 10% historically signals a high probability of corrections, evidenced by the asset’s recent 8% drop from highs near $109,000.
Adding to market unease is the approaching expiration of Federal Reserve Chair Jerome Powell’s term in 2026, raising questions about future U.S. monetary policy direction.
On-chain metrics and exchange activity suggest the possibility of further declines. Analysts warn that liquidation thresholds could be triggered if Bitcoin’s price breaches the $119,000 level, potentially leading to liquidations exceeding $1.15 billion.