The current situation mirrors what we observed when Bitcoin was trading above $100,000.
Buying liquidity is drying up, and the remaining liquidity is merely circulating within the market rather than expanding.
In simple terms, liquidity is stagnating. Without fresh inflows of new capital, the supply imbalance cannot be resolved.
Historically, this imbalance has only been corrected through price declines.
That is exactly what happened above the $100,000 level, and the same pattern is now reemerging.
If new liquidity does not enter the market, we may see an extended period of consolidation or short-term rebounds.
However, such moves would ultimately be meaningless bounces, likely followed by further downside.
Written by Mignolet
