Bitcoin is currently entering a correction phase after a strong rebound from around $107,300 to nearly $118,000.
This pause is seen as necessary to absorb profit-taking pressure, reduce short-term leverage, and lay the groundwork for a more stable price base. On the macro side, the most significant event last week was the Federal Reserve’s decision to cut interest rates by 25 basis points at its September 18 meeting.
This signalled the end of the tightening cycle, but Chair Jerome Powell’s cautious remarks that future policy would remain data-dependent tempered market expectations for the pace of easing.
This explains why Bitcoin stalled, even though a lower interest rate environment typically benefits risk assets.
One of the biggest drivers for Bitcoin this year has been institutional inflows. According to Sosovalue, total net inflows into Bitcoin ETFs have already surpassed $22 billion.
This steady flow of capital helps absorb circulating supply, reduces selling pressure in the market, and supports Bitcoin’s medium-term uptrend.
On-chain data further reinforces the positive outlook. According to CryptoQuant and CoinGlass, Bitcoin balances on exchanges are trending lower, reflecting increased long-term holding demand. Net outflows from exchanges are generally considered a bullish signal, as they indicate investors are less willing to sell immediately, instead moving coins into cold storage. Additionally, the Spent Output Profit Ratio (SOPR) remains above 1, showing that most on-chain transactions are in profit—a typical feature of bull market phases.
On the supply side, miner activity also provides important insights. Following the 2024 halving, daily Bitcoin issuance has been cut in half, lowering the natural selling pressure from miners. However, the key factor to watch is the hashprice—the revenue miners earn per unit of hash. If hashprice declines significantly while energy costs rise, miners may be forced to liquidate reserves to cover expenses, creating short-term supply pressure. At present, there are no clear signs of large-scale “miner capitulation,” but this remains a variable worth monitoring closely.
In the global context, geopolitics continues to play a critical role. Tensions in the Middle East and the protracted conflict in Ukraine have driven safe-haven flows into gold rather than crypto. This can somewhat limit capital inflows into Bitcoin. However, the narrative of Bitcoin as “digital gold” is gradually being reinforced, as major financial institutions increasingly view BTC as a substitute asset in diversified portfolios.
Meanwhile, the derivatives market shows that leverage has cooled following the recent correction. Funding rates have returned to neutral, while open interest has declined along with price, indicating that overcrowded long positions have been flushed out. This is a healthy process that reduces the risk of sharp long squeezes and provides a stronger foundation for a sustainable trend.
Overall, Bitcoin’s medium-term outlook remains positive. With the Fed entering an easing cycle, ETF inflows holding steady, and new supply constrained post-halving, Bitcoin retains several fundamental drivers supporting its bullish structure. The current correction can be considered a necessary pause after a strong rally, and as long as institutional flows remain intact, Bitcoin should maintain its positive momentum. That said, close attention must be paid to potential risks, including inflation data, U.S. labour market conditions, USD/real yield fluctuations, and unexpected regulatory or geopolitical developments.
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