Bitcoin's struggle to breach the $110,000 mark comes amid a broader rally in traditional assets like gold and stocks, prompting questions about the factors holding back the leading cryptocurrency. Several interconnected elements appear to be contributing to this relative underperformance, ranging from macroeconomic pressures to shifts in investor sentiment and internal dynamics within the crypto market itself.

One significant headwind is the accelerating Personal Consumption Expenditures (PCE) inflation. Rising inflation often leads to uncertainty and risk aversion, causing investors to re-evaluate their portfolios and potentially reduce exposure to volatile assets like Bitcoin. This is compounded by the fact that central banks may respond to rising inflation by tightening monetary policy, which can further dampen investor sentiment.

Adding to the macroeconomic pressures, a wave of institutional profit-taking has also weighed on Bitcoin's price. After a period of significant inflows into Bitcoin ETFs, there has been a noticeable reduction, with inflows plummeting by over 50% in the preceding week. This suggests that some institutional investors may be taking profits after Bitcoin's earlier surge, contributing to the downward pressure on price. Arthur Azizov, founder of B2 Ventures, noted that Bitcoin's dip below $109,000 indicated an "overheated market" and confirmed active profit realization by institutions.

The cryptocurrency market recently experienced massive liquidations, wiping out nearly $1.5 billion to $1.7 billion worth of leveraged long positions across various crypto exchanges. Such liquidations can create a chain reaction of selling pressure, exacerbating price declines. The impending expiry of approximately $22 billion in cryptocurrency options also added to the market's volatility, contributing to the downward trajectory as traders adjusted their positions.

Furthermore, the decline in Bitcoin's price can impact crypto infrastructure companies. For example, Coinbase's transaction revenue saw a 39% quarter-over-quarter decline in Q2 2025, illustrating the sensitivity of their business model to market sentiment.

However, it's important to note that Bitcoin's current path is not far off from historical seasonality. September typically delivers negative returns, and Bitcoin has managed to remain slightly positive. Bitcoin network economist Timothy Peterson suggested that the latest pullback fits neatly into past patterns, stating, "This is the September capitulation". He also noted that Bitcoin finishes the next five days higher 80% of the time, with an average gain of 1.7%.

Looking ahead, October has historically delivered strong Bitcoin gains. Since 2019, Bitcoin has closed October in the green every year, averaging returns of 21.89%. Even during the bear market of 2022, BTC posted a 5.53% gain that month. Peterson projected a 50% chance of Bitcoin hitting $200,000 by mid-2026, citing seasonality-driven bull phases between October and June.

In conclusion, Bitcoin's capped performance below $110,000 is likely a result of a confluence of factors, including macroeconomic headwinds, institutional profit-taking, market liquidations, and the impending expiry of crypto options. While short-term challenges exist, historical seasonality suggests a potential recovery in the coming months. Furthermore, the long-term prospects for Bitcoin remain positive, with analysts projecting significant gains in the years ahead.