Bitcoin is expected to conclude the year in a downturn, raising increasing anxiety among analysts who are preparing for a possible upcoming bear market. The inability to maintain momentum above significant psychological and technical thresholds has led to a shift in market sentiment towards caution, prompting investors to keep a close watch on liquidity trends and exchange movements for early indicators of a potential shift in market conditions.
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A recent study from Arab Chain, utilizing CryptoQuant’s Exchange Inflow Value (7-day cumulative) metric, reveals a striking divergence in liquidity trends across major exchanges. The aggregated data for Bitcoin and Ethereum inflows offers a wider perspective on risk positioning within the two largest cryptocurrencies.
On November 24, with Bitcoin priced around $88,438, Coinbase reported seven-day cumulative inflows of roughly $21.0 billion, while Binance recorded lower yet considerable inflows of approximately $15.3 billion. This heightened influx occurred despite prices already being substantially below previous peaks. Instead of indicating robust accumulation, this data suggests a rise in exchange activity associated with portfolio adjustments, hedging, or preparation for potential sales.
Exchange Inflows Indicate Liquidity Tightening Even as Bitcoin Prices Hold Steady
By December 21, Bitcoin’s trading price was around $88,635, only marginally above late-November levels and still constrained within a narrow consolidation band. While price movements showed little advancement, exchange flow data indicated a significant change in market dynamics. Updated on-chain metrics reveal that liquidity flowing into major exchanges diminished sharply over a few weeks, highlighting a slowdown in overall market activity.
Coinbase, regarded as a barometer for institutional and US-dominated flows, experienced seven-day cumulative inflows drop to around $7.8 billion, which signifies a decline of over 60% compared to November’s inflow levels. Binance also saw a decrease but not as drastic, with inflows around $10.3 billion during the same timeframe, leading to Binance overtaking Coinbase in net inflows in December, reversing previous trends.
This contrasting trend indicates that while overall liquidity has diminished, trading activities are increasingly centralizing on platforms that cater to shorter-term positions and active risk management. Concurrently, the lack of a substantial price reaction emphasizes Bitcoin’s continued sideways trading, even as new capital flows have decelerated. Overall, the data reflects a market operating with reduced activity and lower urgency from both buyers and sellers.
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BTC Falls Below Critical Moving Averages as Daily Trend Weakens
Currently, Bitcoin is trading close to $87,900 on the daily chart, continuing a corrective phase that commenced following a failed breakout above $120,000 earlier this quarter. The current market structure indicates a distinct shift in short-term trends, with prices firmly below significant daily moving averages. Notably, Bitcoin has fallen below both the 111-day and 200-day simple moving averages, which have turned to act as dynamic resistance zones rather than support.
