Bitcoin’s momentum appears to be taking a pause, even as inflation data comes in softer than expected. While the Consumer Price Index (CPI) print at 2.3% was the lowest since 2021—usually a bullish signal for risk assets like crypto—BTC barely flinched. Now, with a noticeable drop in both Bitcoin dominance and the Coinbase premium, the market could be entering a cooling-off phase before its next big move.
A Cooling Trend or Just a Pause?
After a brief spike to $105,800 earlier this week, Bitcoin has pulled back to around $103,600, a modest 2% drop. But the more telling signs of market fatigue lie beneath the surface. Bitcoin’s market dominance—which measures its share of the total cryptocurrency market cap—has fallen from 65.38% to 61.96%. This roughly 5% decline is often interpreted as a signal that traders are rotating out of Bitcoin and into altcoins, many of which remain significantly undervalued compared to their all-time highs.
What’s Up With the Coinbase Premium?
Another key metric flashing caution is the Coinbase premium. Historically, when the BTC price on Coinbase trades higher than on other global exchanges like Binance, it suggests robust demand from U.S.-based institutional buyers. That premium has now narrowed—or even flipped—indicating reduced interest from the U.S. investment crowd.
This is particularly notable because major U.S. institutions such as MicroStrategy often use Coinbase to execute large BTC purchases. A drying up of this demand could mean that institutional buyers are either taking a breather or waiting for better entry points.
Macro Backdrop: Mixed Signals from the Fed
The softer CPI reading would normally support the case for the Federal Reserve to lower interest rates. A lower rate environment tends to favor speculative assets, crypto included. However, according to Jim Bianco of Bianco Research, the likelihood of a rate cut is not as straightforward. Despite the recent CPI print, Bianco points out that most major economic data since May 1 has reduced the chances of a near-term rate cut. The CME FedWatch Tool still gives a 51.4% chance of a 25 bps cut in September, but that figure could easily drop with further strong economic readings.
So, while lower inflation is a green flag for Bitcoin, uncertainty around Fed policy remains a yellow light.
Key Technical Levels to Monitor
Looking at Bitcoin’s current price action, the short-term support lies near $102,600. This level marks the upper edge of a critical value zone where over 70% of BTC’s trading volume occurred between November 2024 and February 2025. Should BTC fall below this level, a deeper correction toward the lower boundary of this zone at $93,100 becomes a real possibility.
On the flip side, if bulls step in at or above the $102,600 level, Bitcoin could resume its upward climb. Immediate resistance lies at its all-time high around $109,000. A breakout above that could propel BTC toward the 161.8% Fibonacci extension at $118,700, with the 261.8% extension at $135,500 being the next bullish milestone.
Conclusion: Consolidation or Continuation?
In the short term, Bitcoin seems to be caught between conflicting signals. On one hand, macro conditions like cooling inflation are potentially favorable. On the other, declining dominance and lower U.S. demand hint at a market that may need time to recalibrate.
Investors should closely monitor the $102.6k support zone. Whether BTC bounces from there or breaks below could determine if this is just a healthy pause—or the beginning of a broader correction.
One thing’s for sure: with Bitcoin still hovering near record highs and altcoins starting to gain traction, this market is far from boring.
