Currently, the flagship cryptocurrency is aiming for new highs, but it is still facing obstacles along the way. The latest challenge comes from the ongoing battle between bulls and bears, both fighting for dominance in Bitcoin's trajectory.

At the start of Monday, on June 16, Bitcoin opened in the red, followed by a recovery, hovering around $105,828. Later, it gained momentum, trading at $107,050. The daily low was recorded at $104,519, while the high reached $106,157. Since then, this level has been surpassed, and the market is attempting to regain lost ground.

Bitcoin and US inflation

According to analysts, Bitcoin showed little reaction to the recent slowdown in US inflation. This muted response was largely driven by weaker-than-expected macroeconomic data from the US Bureau of Labor Statistics (BLS).

In May, the US Consumer Price Index (CPI) inched up by 0.1% from 0.2% in April. Year-over-year, the CPI increased to 2.4%, slightly below analysts' forecast of 2.5%. The primary contributor to inflation growth was the housing sector: home prices rose 0.3% for the month and 3.9% over the year.

A similar increase was observed in food prices, while energy and gasoline costs declined by 1% and 2.6%, respectively. This triggered moderate volatility in the market, but for Bitcoin, little changed.

In the current environment, market participants remain confident that the Federal Reserve will keep its key interest rate range at 4.25%–4.5%. This decision is expected at the meeting scheduled for Wednesday, June 18, with the probability of this scenario estimated at 99.8%. Traditionally, greater liquidity availability supports the growth of risk assets like Bitcoin and other digital currencies. However, the situation is different this time, so surprises cannot be ruled out.

The cryptocurrency market showed minimal reaction to the BLS data. At one point, Bitcoin climbed to $110,000, while Ethereum surpassed $2,800. However, the rally quickly lost steam and failed to continue. Nonetheless, most top-10 digital assets remained in positive territory.

The stock market responded with even more modest gains. Late last week, the Nasdaq Composite rose by only 0.27%, the S&P 500 by 0.28%, and the Dow Jones by 0.18%.

Waning bullish momentum: Bitcoin may test the critical support level of $105,000

Over the past few days, Bitcoin, which had been steadily advancing, showed signs of hesitation and weakening. Experts attribute this slowdown to the crypto market grappling with the consequences of unrest in the Middle East. Nevertheless, the flagship cryptocurrency remains resilient and continues to justify its leading status.

According to specialists, the recent price instability signals that Bitcoin's bullish momentum is not particularly strong. Analysts also observe that bullish sentiment among investors has weakened, allowing bears to temporarily seize control. Still, Bitcoin has managed to stay above the $105,000 mark, which offers a degree of optimism.

Positive drivers for Bitcoin include strong open interest among investors. However, bullish sentiment remains fragile, creating uncertainty in the market.

What's next for Bitcoin?

Preliminary forecasts suggest that the current indecision in the crypto market will likely persist until new key drivers emerge. These could include important news or significant changes in sentiment indicators. Analysts believe that for the uptrend to resume, the sentiment index needs to rise above 60%–65%. However, this scenario requires both an increase in Bitcoin buyers and higher open interest.

Without these factors, Bitcoin risks testing lower support levels in the $102,000–$103,000 range. Against this backdrop, caution is advised to avoid slipping into a bearish trend. At present, Bitcoin has resumed its climb up the price ladder, although no major price shifts have occurred yet.