Why is Bitcoin down today?
Bitcoin supported by corporate accumulation as exchange reserves hit six-year low
Bitcoin is trading around $106,262 after slipping briefly below $107,000, supported by strong corporate accumulation and reduced selling pressure across exchanges.
CryptoQuant data shows that Bitcoin reserves on centralized platforms have dropped to 2.44 million BTC, marking the lowest levels since 2018. This declining exchange reserve indicates lower supply for potential selling, often seen as a bullish structural signal. Firms like Strategy, the Blockchain Group, and Metaplanet continue to bolster their Bitcoin treasuries, contributing to the ongoing supply squeeze. The steady ETF inflows and tightening exchange balances suggest that institutional demand remains healthy despite short-term price dips. Analysts believe that this low exchange reserve trend could lay the groundwork for a significant price surge if macroeconomic conditions turn favorable. Additionally, the continued interest from corporations signals growing acceptance of Bitcoin as a core treasury asset.
Musk’s political clash with Trump rattles Bitcoin’s momentum
Bitcoin’s pullback was further pressured by escalating political tension between Elon Musk and President Donald Trump. Musk has openly challenged Trump’s “Big Beautiful Bill” and suggested forming a new political party, gaining over 80% support in a poll he posted on X. This public clash has introduced additional market uncertainty, with traders using the narrative as justification for Bitcoin’s drop after days of range-bound trading. Musk’s stance and his potential political ambitions are now seen as short-term market disruptors, adding a layer of volatility as investors assess the fallout from this high-profile dispute.
Some market participants fear that Musk’s influence, particularly among younger investors and tech communities, could create political rifts that destabilize financial markets in the short term. The intensifying debate may continue to act as a temporary drag on Bitcoin’s price until more clarity emerges.
Cautious Q3 outlook persists despite structural support
Bitfinex analysts expect Bitcoin to remain in a range-bound phase through Q3, historically the weakest quarter for the asset with an average return of just 6%. The long-to-short ratio falling to 0.90, according to Coinglass, reflects increasing bearish sentiment in the derivatives market as traders shift toward short positions. Analyst Anton Kharitonov cites key headwinds including geopolitical tensions in Qatar, rising U.S. Treasury yields, and weakening derivatives demand as contributing to near-term caution.
Kharitonov says:
"The current correction does not affect Bitcoin's long-term bullish outlook. However, the next few days may remain under bearish pressure."
Institutional shifts, such as Bit Digital reallocating from Bitcoin to Ethereum, are adding to concerns of potential BTC sell-offs that could cap upside attempts. However, the long-term setup remains constructive, with reduced exchange supply and strong institutional inflows positioning Bitcoin for potential upside if a bullish catalyst emerges. Investors are closely monitoring Federal Reserve Chair Jerome Powell’s upcoming speech, which could provide critical signals for macro policy direction and influence Bitcoin’s trajectory in the coming weeks.
Recently we wrote that Bitcoin price action has kept traders on edge over the past week, as the cryptocurrency stayed locked in a narrow range below the supply zone at $108,800 and above the support at $106,500.
