Bitcoin's market liquidity is tightening following a significant correction from its February peak of $97,000. On-chain data from Glassnode indicates a 54% drop in exchange inflows and a 35% decrease in open interest for Bitcoin futures, reflecting reduced investor participation and speculative activity. Currently priced just below $83,000, Bitcoin has experienced a 23% decline from its January all-time high of nearly $109,000. The unwinding of cash-and-carry trades and changing sentiment due to geopolitical developments contribute to this liquidity crunch. While short-term holders face substantial unrealized losses, long-term holders remain largely inactive, indicating confidence in Bitcoin's value proposition. As the market adjusts, volatility may stay elevated until new capital enters to support higher prices, particularly amid macroeconomic uncertainties and the Federal Reserve's interest rate decisions.

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