Bitcoin Misses Out on Inflation Bump as Weak Demand Takes Hold

The S&P 500 reacted positively to recent inflation data, but Bitcoin has been slow to follow suit. Despite in-line July inflation figures, which typically support risk assets, Bitcoin remains stuck between $63,000 and $64,000.

CryptoQuant analysts attribute the muted reaction to weak spot demand, citing a negative Coinbase Premium Index of -0.1% since May. This index measures the difference between Coinbase's spot price and other exchanges' prices, indicating limited buying pressure from U.S. investors.

Spot trading activity remains subdued, with U.S. spot Bitcoin ETF flows weakening. This fragile market structure makes it vulnerable to further selling pressure as leveraged long positions become increasingly exposed.

Bitcoin faces resistance at the Short-Term Holder Cost Basis near $68,700, where recent buyers holding losses may look to exit positions. However, this prolonged correction has pushed holder profitability towards levels historically associated with deeper market resets.