Bitcoin’s recent market activity suggests a reduction in downward pressure, with a notable decline in sell-offs on cryptocurrency exchanges, according to Bitfinex analysts. This development indicates a potential stabilization of Bitcoin’s price in the short term. The analysts highlighted a rapid drop in Bitcoin’s liquidity inventory ratio, which has decreased from 41 months of supply in October 2024 to just over 6.5 months. This contraction in liquidity supply typically fosters a scarcity perception, often leading to price increases.
Bitcoin managed to reach the $100,000 mark on January 6 for the first time since December 20, before eventually pulling back. As of the publication time, Bitcoin is trading at approximately $96,880. The ongoing market volatility is expected to continue, with analysts observing a sharp decline in the flow of Bitcoin from miners to exchanges and an anticipation that miners will hold onto their assets amid current profits and a bullish trend.
However, alongside the diminishing sell-side pressure, demand for Bitcoin has also been tapering, as noted by Glassnode’s lead analyst. Spot trading volume has dropped significantly since November, indicating a reduction in fresh demand despite an overall decrease in selling activity. Bitcoin’s price surged by 46% between early to late November 2024, surpassing the $100,000 threshold in December. The sentiment among industry experts remains cautiously optimistic as they continue to monitor the evolving market dynamics.
