Bitcoin liquidity signals point to possible price recovery in H1 2026
Bitcoin (BTC) has fallen from its all-time high near $126,000 to about $87,400 amid heavy selling since late October, highlighted by a $19 billion liquidation cascade and a record $903 million institutional outflow. Recent analysis finds structural exhaustion in the sell-off and improving liquidity conditions that could support a multi-week rebound and a broader recovery in the first half of 2026. Key drivers cited: cooling inflation expectations (which could allow the Fed to cut rates), potential Fed reverse repo adjustments injecting up to $40 billion monthly through April, early signs of quantitative easing, and sustained spot-market accumulation — roughly $3.72 billion in purchases over four weeks. Risks remain from persistent long-term inflation and earlier liquidity drains (including a U.S. government shutdown). For traders, the main signals to watch are breakout above the descending resistance trendline, continued spot accumulation, Fed policy moves (rate cuts or reverse repo changes), and incoming inflation/employment data. If liquidity returns as suggested, BTC could see renewed upside pressure toward previous highs; if macro tightening or inflation surprises persist, recovery may be limited.
Bullish
The article signals a bullish outlook because multiple liquidity indicators and on-chain activity point to conditions that could support a BTC recovery in H1 2026. Evidence for a bullish view: structural exhaustion after the sell-off (suggesting selling pressure is waning), consistent spot accumulation (~$3.72B over four weeks), and macro signals that could return liquidity to risk assets (cooling inflation, potential Fed rate cuts, reverse repo injections up to $40B/month, and early quantitative easing). Historically, similar setups — where spot accumulation coincides with easing macro policy and reduced liquidation pressure — have preceded multi-week to multi-month recoveries in Bitcoin (for example post-2020 liquidity injections and the 2020–2021 bull run following stimulus and low rates). Short-term implications: traders may see a relief rally or volatility as markets test resistance; watch for a breakout above the descending trendline and confirmatory volume/spot flows. Long-term implications: if Fed easing materializes and spot demand persists, capital could flow back into crypto, supporting higher price levels. Key risks that temper the bullish case include persistent long-term inflation, unexpected hawkish Fed moves, or renewed large outflows — any of which could limit upside or trigger further declines.