Bitcoin (CRYPTO: BTC) has failed to capitalize on favorable U.S. inflation data, remaining stuck around $63,000 to $64,000. Despite July inflation figures being in line with expectations—a development that typically provides a tailwind for risk assets—the cryptocurrency has shown limited upside momentum.

CryptoQuant analysts attributed the muted market reaction primarily to continuously weak spot demand. In a post on Aug. 14, analysts highlighted that the Coinbase Premium Index currently stands at negative 0.1%. This metric has remained mostly negative since May, signaling limited buying pressure from U.S. investors.

Spot trading activity remains subdued, and U.S. spot Bitcoin ETF flows have weakened. This dynamic creates a potentially fragile market structure where spot buyers remain hesitant while futures positioning is comparatively elevated. When favorable macro catalysts fail to generate upside, leveraged long positions become increasingly vulnerable to unwinding, which could add further selling pressure.

What the Numbers Show

The divergence between macroeconomic tailwinds and price action highlights a structural weakness in spot demand. While favorable inflation data should theoretically support asset prices, the persistent negative Coinbase Premium Index (-0.1%) indicates that U.S.-based buyers are not stepping in to provide liquidity or upward pressure. This lack of spot participation contrasts sharply with elevated futures positioning, suggesting the current price level is supported more by leverage than by fundamental buying interest.

Capitulation Signals Emerge

Prolonged correction has pushed holder profitability toward levels historically associated with deeper market resets. CryptoQuant data shows Bitcoin’s supply in profit has fallen to just 51.4% as BTC trades near $63,000. Consequently, 48.6% of Bitcoin supply in circulation is currently held at an unrealized loss.

This represents the lowest level since 2023 and marks a significant reversal from the market peak, when almost 100% of Bitcoin was held in profit. The last time supply in profit hovered near 51%, Bitcoin was trading around $16,000 to $20,000 in early 2023.

Bitcoin faces overhead supply around the Short-Term Holder Cost Basis near $68,700. Recent buyers sitting on losses could use a recovery to exit positions, adding resistance. While weak spot demand could keep prices under pressure in the near term, the approach to capitulation territory suggests the market is testing historical support levels.

Leading cryptocurrencies held steady on Thursday, with Bitcoin slipping below $63,000 amid declining trading volume, while US stocks climbed to record highs driven by softer-than-expected producer inflation data.

Bitcoin (CRYPTO: BTC) declined 0.10% to $63,412.53 at 9:20 pm EDT, failing to break above the $64,000 resistance level. The asset’s attempt to reclaim higher ground fizzled as 24-hour trading volume contracted by 19%. In contrast, Ethereum (CRYPTO: ETH) rose 0.32% to $1,884.10, and XRP (CRYPTO: XRP) gained 0.68% to $1.01. Solana (CRYPTO: SOL) and Dogecoin (CRYPTO: DOGE) also posted modest gains of 0.33% and 0.32%, respectively.

Market Liquidity and Derivatives

Despite the price stagnation in Bitcoin, derivatives markets showed mixed signals. Nearly $212 million was liquidated from the cryptocurrency market in the last 24 hours, with long and short positions broadly balanced according to Coinglass data. Bitcoin’s open interest slid 0.68% over the same period. Notably, retail and whale derivatives traders on Binance remained net long on Bitcoin despite the price decline.

The global cryptocurrency market capitalization stood at $2.17 trillion, declining 0.47% from the previous day. Among smaller caps, AKEDO (AKE) led gains with a 70.83% surge to $0.006921, followed by Humanity (H) up 14.93% and ether.fi (ETHFI) up 14.76%.

Equities Rally on Inflation Data

US equity markets rallied sharply on Thursday. The S&P 500 climbed 0.65% to close at a record high of 7,798.99. The Nasdaq Composite added 0.81% to settle at 26,803.03, while the Dow Jones Industrial Average rose 0.13%, or 69.72 points, to end at 53,839.99.

The rally followed the release of the Producer Price Index, which was unchanged in July, falling short of economists’ forecast for a 0.2% monthly increase. Core PPI, which strips out food and energy, rose 0.2% against the 0.3% expected. This data arrived a day after the July Consumer Price Index rose 3.4% year-on-year, matching expectations, while core inflation eased to 2.5%.

Consequently, the odds of an interest rate hike in September fell from 40.6% to 34.8%, according to the CME Fedwatch tool. Crypto-related equities also benefited from the broader market sentiment, with Strategy Inc. (NASDAQ: MSTR) closing up 2.39% and Bitmine Immersion Technologies Inc. (NYSE: BMNR) rising 2.24%.

What the Numbers Show

On-chain analytics reveal a divergence between price action and retail sentiment. Blockchain analytics firm CryptoQuant highlighted that Bitcoin was rejected at the Trader On-chain Realized Price of $65,600, a level that has consistently capped rebounds in recent months. The Realized Price represents the average acquisition cost basis of all coins in circulation.

Simultaneously, Santiment noted rising social mentions of terms such as "dead," "dying," and "over" tied to cryptocurrency. This surge in negative sentiment language suggests retail patience is breaking, a pattern often observed when prices feel stuck despite key support levels holding. Santiment indicated that such fear-driven chatter can create attractive setups for patient buyers when stronger hands continue accumulating.