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This week, Bitcoin’s (BTC) price movement was lackluster following another unsuccessful attempt to reclaim the monthly volume-weighted average price (VWAP), with BTC stabilizing around $90,000 after the Federal Reserve’s 0.25% interest rate reduction. The market has continuously rejected any substantial push above $93,000, thus restricting bullish momentum.
Key insights:
An analyst noted that the contraction in liquidity is stifling Bitcoin’s upward movement, leading to diminished demand compared to selling pressure.
The $94,000 to $98,000 zone remains a crucial liquidity area, but BTC must steer clear of a bearish structural break beneath $88,000.
Liquidity compression influences Bitcoin’s market dynamics
Crypto analyst Darkfost indicates that Bitcoin’s challenges are less about sentiment changes and more related to diminishing liquidity, especially from stablecoins. Inflows of stablecoins onto exchanges represent a reliable indicator of incoming capital, and right now, that indicator is showing concerning signs.
The data reveals a notable decline in liquidity: ERC-20 stablecoin inflows have dropped from $158 billion in August to about $76 billion this month, marking a nearly 50% decrease. Even the longer-term 90-day average fell from $130 billion to $118 billion, confirming this trend is not just temporary but a structural issue.
This downturn has directly impacted buying power. Darkfost pointed out that recent price rebounds are not fueled by significant accumulation but by phases of decreased selling pressure, indicating the market lacks the necessary inflows to maintain higher highs or protect key support levels. Until new liquidity enters the market, Bitcoin’s price increases are expected to be modest.
Trader Daan Crypto Trades observed that the broader liquidity map still points to the $97,000–$98,000 area as the next significant price magnet. However, BTC has consistently struggled to surpass $94,000, the first hurdle that needs to be crossed for increased volatility.
In the absence of that confirmation, the market remains susceptible to swift range reversals that continue to ensnare both long and short positions.
Related: Prediction markets speculate Bitcoin won’t hit $100K before the year concludes
BTC approaches significant breakdown level near $90,000
From a structural perspective, Bitcoin has now experienced three consecutive failures to breach the $93,000 mark. The latest rejection created a clear swing failure pattern (SFP) following the FOMC meeting, indicating exhaustion and reinforcing the difficulties in continuing the trend.
BTC is also nearing a bearish rising wedge confirmation, which will activate if the price falls below $88,000 and establishes a bearish break of structure (BOS). Such a breakdown would reveal an external liquidity sweep around $84,000, with further downside potential towards the $80,600 quarterly lows, a level that corresponds with previous inefficiencies on higher-timeframe charts.
Nonetheless, bullish traders like Captain Faibik asserted that BTC is currently undergoing calculated shakeouts aimed at eliminating weak hands. For a bullish resurgence, BTC must secure a weekly close above $90,000, ideally near $93,000, establishing the structural groundwork necessary to target the $96,000 breakout region, where a momentum expansion could finally materialize.
Related: Bitcoin projected for a 2026 bottom as exchange volumes slow down: Analysis
This article does not offer investment advice or recommendations. Every investment and trading decision comes with risk, and readers should perform their own due diligence. While we aim to provide accurate and timely information, Cointelegraph does not guarantee the validity, completeness, or dependability of any details within this article. This material may include forward-looking statements that pose risks and uncertainties. Cointelegraph will not be liable for any losses or damages resulting from reliance on this information.
This article does not offer investment advice or recommendations. Every investment and trading decision comes with risk, and readers should perform their own due diligence. While we aim to provide accurate and timely information, Cointelegraph does not guarantee the validity, completeness, or dependability of any details within this article. This material may include forward-looking statements that pose risks and uncertainties. Cointelegraph will not be liable for any losses or damages resulting from reliance on this information.
