Bitcoin News Today: Bitcoin Falls 3.7% Amid Weak Liquidity and Fading Institutional Demand

Bitcoin has seen a steady decline in price over the past week, dropping by roughly 3.7% amid signs of a potential sell-off or profit-taking phase [1]. Having reached a peak above $123,000 earlier in the month, the cryptocurrency has since settled within a trading range of $113,000 to $114,000, with its current price hovering at $114,420. This suggests a growing uncertainty about its short-term momentum [1].

According to Arab Chain, a contributor to CryptoQuant’s QuickTake platform, weakening liquidity and inconsistent institutional demand are major contributors to the recent price drop [1]. On-chain data shows a sharp decline in the liquidity inventory ratio since mid-July, now standing at levels representing just over three months of available Bitcoin supply on major trading platforms [1]. This metric, which measures the amount of Bitcoin accessible for sale relative to the speed of market activity, has fallen significantly, weakening the market’s ability to support price stability [1].

Normally, reduced supply would put upward pressure on prices. However, in this case, the absence of new demand—particularly from large investors or ETFs—has left the market vulnerable. Arab Chain explains that in a thin market, even small sell orders can lead to sharp price drops due to limited order-book depth [1]. This dynamic increases volatility and makes the price more sensitive to sudden downward moves [1].

The lack of consistent institutional support is also evident in the erratic behavior of Bitcoin-linked exchange-traded funds (ETFs). Arab Chain notes that ETF inflows have been highly volatile, with rapid surges followed by strong outflows [1]. This inconsistency has limited their effectiveness in stabilizing the price during sell-offs [1]. Furthermore, on-chain data reveals that “smart portfolios”—high-value addresses associated with strategic accumulation—have only shown modest buying activity during the recent downturn [1]. While such accumulation is a positive sign for long-term confidence, its slow and limited pace has not been enough to counteract selling pressure in real time [1].

Analysts warn that Bitcoin’s market remains fragile and may struggle to regain stability without fresh demand entering the market. Institutional buyers or increased accumulation from large addresses could help restore equilibrium, but until then, Bitcoin is likely to remain vulnerable [1]. Price movements will continue to depend heavily on shifts in demand and liquidity availability [1].

The broader cryptocurrency market is also feeling the strain, with limited signs of new capital entering the space [1]. This has led to growing concerns about the sustainability of Bitcoin’s recent price levels, especially given historical patterns where constrained liquidity has led to extended volatility or consolidation [1].

Institutional players are closely monitoring liquidity conditions, ETF flows, and the behavior of long-term holders for early signals of a potential rebound. Meanwhile, traders and investors remain cautious, with many staying on the sidelines in the absence of clear catalysts for renewed buying activity [1].

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Source: [1] https://www.newsbtc.com/bitcoin-news/is-bitcoin-losing-steam-analysts-warn-of-fragile-market-support/