Crypto: Bitcoin Rallies Expected To Be Short-lived Until Liquidity Returns:...

Bitcoin price breakouts fail to hold due to insufficient bid-side liquidity. Glassnode analysis identifies the key metrics that are likely to mark the next phase of BTC price expansion.

Bitcoin (BTC) bulls managed to prevent a price drop into the $80,700 to $83,400 support zone, and futures market data points to a potential short-term liquidity grab near $93,500. Despite the short-term bullish bias, Glassnode analysts believe a more robust recovery cannot take place until a key market liquidity metric reaches a certain threshold.

Over 22% of the Bitcoin supply is currently held at a loss, increasing sensitivity to support breaks.

BTC inflows to Binance remain near 2020 lows, limiting immediate sell pressure.

In an X post, Glassnode said that the market’s attention has shifted to liquidity after Bitcoin held the support range between $80,700 and $83,400. A transition toward a sustained rally must be reflected in liquidity-sensitive indicators, particularly the realized profit/loss ratio (90-day moving average).

Strong price recoveries, including mid-cycle recoveries over the past two years, only occurred once the ratio stayed above 5. Such a move has consistently signaled renewed liquidity inflows and capital rotation back into Bitcoin.

Glassnode also highlighted the rising supply stress on BTC. More than 22% of the circulating Bitcoin supply is currently held at a loss, a condition previously seen in Q1 2022 and Q2 2018.

This increases the correction risk, and if Bitcoin fails to hold its key support levels, specifically the −1 standard deviation band of the short-term holder cost basis and the true market mean, selling from long-term holders could resume.

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CryptoQuant data shows limited selling at the moment, while monthly BTC inflows to Binance are averaging roughly 5,700 BTC. This is less than half the long-term average of around 12,000 BTC, and the lowest level since 2020.

Source: CoinTelegraph