Bitcoin reclaims $102,000 as sell-side liquidity dries up

Bitcoin (BTC) reclaimed the $102,000 worth degree on Jan. 6 after climbing 4% over the day amid a wider market rally as accumulation continues to outpace profit-taking, based mostly on CryptoSlate knowledge.

The flagship crypto was buying and selling at $101,630 as of press time after failing to maintain upward momentum as US markets closed for the day. The restoration comes as sell-side liquidity continues to shrink, in keeping with the most recent Bitfinex Alpha report.

Bitcoin’s return to the $102,000 vary comes after a pointy 15% correction from its all-time excessive (ATH) of $108,100, achieved on Dec. 17, 2024. The correction adopted a 61% rally sparked by the US election outcomes on Nov. 6, 2024, signaling strong market optimism. 

Whereas analysts predicted a deeper pullback within the first quarter, the report identified that rising metrics counsel the bearish stress could have largely subsided.

Promote-side liquidity at file lows

A key driver of Bitcoin’s worth motion is the speedy decline in sell-side liquidity. The Liquidity Stock Ratio, a metric indicating how lengthy the present provide can fulfill market demand, has plummeted from 41 months in October to six.6 months. 

This steep drop mirrors the liquidity tightening seen throughout Bitcoin’s rallies within the first and fourth quarters of final yr, signaling constrained availability in periods of heightened demand.

Moreover, miners — a major supply of sell-side stress — have contributed to the present liquidity dynamics, as their spot promoting has diminished after the 2024 halving.

Traditionally, miners promote Bitcoin to fund operations and equipment upgrades, however miner-to-exchange flows have slowed considerably since April 2024. Though miner flows elevated in November final yr, these ranges stay far under earlier peaks.

In keeping with Bitfinex, miners at the moment are in a robust place, supported by substantial unrealized earnings. This holding conduct has additional tightened liquidity, bolstering Bitcoin’s upward trajectory.

The information suggests a broader development the place miners retain their BTC holdings as they anticipate greater costs or search to optimize their positions amid favorable market situations.

Beginning robust

The report highlighted that Bitcoin is beginning 2025 on a agency footing, translated by constructive on-chain metrics. It added that the interaction between diminishing sell-side liquidity will stay a pivotal consider Bitcoin’s worth motion. 

Whereas the chance of a deeper pullback nonetheless lingers, liquidity metrics at multi-year lows and miners signaling confidence by their holding patterns counsel that a lot of the downward stress has eased, setting the stage for potential additional good points.

Talked about on this article