The post Liquidity Will Decide BTC’s Next Rally: Glassnode appeared on BitcoinEthereumNews.com. Bitcoin price breakouts fail to hold due to insufficient bid-sideThe post Liquidity Will Decide BTC’s Next Rally: Glassnode appeared on BitcoinEthereumNews.com. Bitcoin price breakouts fail to hold due to insufficient bid-side

Liquidity Will Decide BTC’s Next Rally: Glassnode

3 min read

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 say a more robust recovery cannot take place until a key market liquidity metric reaches a certain threshold.

Key takeaways:

  • 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.

Bitcoin liquidity is the metric to watch

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). 

BTC realized profit/loss ratio (90-DMA) Source: Glassnode

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.

BTC realized profit/loss ratio (90-DMA) Source: Glassnode

Related: Bitcoin price fails to follow as gold hits $5.3K record into FOMC

Bitcoin exchange flows still favor holding

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.

Bitcoin BTC inflows for 30DMA. Source: CryptoQuant

Since the exchange inflows are associated with selling, persistently low inflows suggest that investors are holding rather than preparing to sell.

This reduces immediate downside risk but does not replace the need for liquidity confirmation. Crypto analyst Darkfost added,

Related: Bitcoin traders eye $93.5K liquidation sweep despite Fed interest rate pause

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.

Source: https://cointelegraph.com/news/bitcoin-rallies-expected-to-be-short-lived-until-liquidity-returns-data?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound

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