Analysis: Bitcoin sends a signal at the end of the bear market, and liquidity may return to trigger the next round of fluctuations

Comparing news, Bitfinex's latest report indicates that Bitcoin (BTC) has continued to fluctuate within a narrow range recently, and volatility, trading activity, and market liquidity have all been reduced to levels similar to the end of a bear market.

Currently, the price of Bitcoin is still hovering above the “median realised price” (median realised price) around $6.32 million, while the key level for short-term holders (STH) to achieve overall profit is at $671.76 million. Meanwhile, market demand is weakening: US spot Bitcoin ETFs recorded a net outflow of about US$385 million last week, corporate Bitcoin reserve-related activity also turned negative, spot trading volume fell to a multi-year low, and the rate of Bitcoin transfers fell to its lowest level in seven years.

Bitfinex said that in the current market environment where liquidity is extremely scarce, any slight change in the flow of capital may cause large fluctuations in the price of Bitcoin. Meanwhile, weak retail activity, declining real revenue, and deteriorating consumer confidence suggest that demand from US residents is under pressure. Bitfinex pointed out that the current market is clearly divided: loose financial conditions drive traditional risk assets to rise, but the crypto market has yet to receive a corresponding inflow of capital.

Bitfinex believes that the current core issue in the market has moved from “whether monetary policy is improving” to “whether improved liquidity can be converted into an inflow of crypto assets.” If Bitcoin spot ETFs resume continuous net inflows in the future, and stablecoin supply expands at the same time, it will mean that the liquidity transmission mechanism in the crypto market is restarted, and it may become an important catalyst for BTC to break through a long period of low volatility.

Although the macro environment gradually improved before capital was returned, the rise in the crypto market still lacked financial support. However, since market participation has dropped to a very low level and BTC continues to hold the key achieved price support level, once liquidity re-enters the market, it may cause sharp fluctuations, and the current structure is more inclined to usher in an upward breakthrough after demand recovers.

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