Bitcoin Price Decline Driven by Liquidity Squeeze, ETF Volatility, and Weak Accumulation
Bitcoin price extended its downward trend into another day, retesting the $113,000 threshold and raising market uncertainty. Since late July, three key factors have eroded price support. First, the liquidity inventory ratio collapsed to just over three months of supply, creating a supply crisis. Instead of sparking scarcity-driven gains, thin liquidity amplified every sell order, causing sharper declines. Second, Bitcoin ETF demand proved unstable. After rapid inflow peaks, strong negative outflows followed, leaving no substitute demand when institutional buyers retreated. Third, smart addresses accumulated BTC slowly and steadily without notable spikes. Although latent demand existed, it failed to counteract bearish pressure during the pullback. Without fresh buying from major investors or ETFs, the market remains brittle and vulnerable to further dips. Traders should watch for changes in liquidity metrics, ETF flows, and accumulation patterns to gauge possible reversals or continued weakness.
Bearish
The categorization is bearish due to three reinforcing weaknesses. Historically, low liquidity amplifies price swings, as seen in early 2021 when thin order books led to rapid drops on modest sell-offs. The crash in liquidity inventory signals a supply shortage but paradoxically increases fragility without new buyers. Unstable ETF flows mirror past sell-offs after peak inflows, such as the 2023 ETF launch cycle, where withdrawals triggered sharp price corrections. Finally, slow smart-address accumulation lacks the urgency observed before major bounces in 2020, reducing support when markets weaken. In the short term, these factors suggest continued volatility and downside risk. Long term, price may find a floor if accumulation picks up or ETF demand stabilizes, but current conditions favor further declines.