Bitcoin (CRYPTO: BTC) has failed to capitalize on favorable U.S. inflation data due to continuously weak spot demand, even as on-chain metrics suggest the market is approaching capitulation territory.

Good Macro News, Weak BTC

Bitcoin remains stuck around $63,000 to $64,000 despite in line July inflation data that would typically provide a tailwind for risk assets.

In an X post on Aug.14, CryptoQuant analysts attributed the muted reaction primarily to weak spot demand.

Currently at negative 0.1%, the Coinbase Premium Index has remained mostly negative since May. It signals limited buying pressure from U.S. investors.

Spot trading activity remains subdued and U.S. spot Bitcoin ETF flows have weakened.

That creates a potentially fragile market structure with spot buyers remaining hesitant while futures positioning comparatively elevated.

When favorable macro catalysts fail to generate upside, leveraged long positions become increasingly vulnerable to unwinding, potentially adding further selling pressure.

Bitcoin faces overhead supply around the Short-Term Holder Cost Basis near $68,700, where recent buyers sitting on losses could use a recovery to exit positions.

While weak spot demand could keep prices under pressure in the near term, that same prolonged correction has pushed holder profitability toward levels historically associated with deeper market resets.

Weak Demand Meets Capitulation

CryptoQuant data shows Bitcoin’s supply in profit has fallen to just 51.4% as BTC trades near $63,000.

48.6% of Bitcoin supply in circulation is currently held at an unrealized loss, which is the lowest level since 2023 and a significant reversal from the market peak when almost 100% of Bitcoin were held in profit.

The last time supply in profit hovered near 51%, Bitcoin was trading around $16,000 to $20,000 in early 2023.

That does not necessarily mean Bitcoin has reached its final bottom, but in the near term spot demand will need to return to avoid further capitulation.

Image: Shutterstock