Bitcoin liquidity has reached its lowest level since 2018, driven by large holders accumulating over 373,700 BTC in the past month. This scarcity deepens market squeezes, positioning long-term investors to dominate as available supply drops to 3.12 million BTC.
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Bitcoin sell-side supply hits six-year low at 3.12 million BTC amid $110k trading levels.
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Whale accumulation signals ongoing market phase favoring long-term holders over short-term traders.
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Liquidity Inventory Ratio falls to 8.3 months, indicating potential for major price upside as buying pace outstrips supply.
Discover how declining Bitcoin liquidity since 2018 impacts crypto markets and signals bullish trends for investors. Explore accumulation data and ETF inflows now for key insights.
What is Bitcoin Liquidity and Why is it Declining Now?
Bitcoin liquidity refers to the ease with which the cryptocurrency can be bought or sold without significantly affecting its price, primarily determined by available supply on exchanges and trading volumes. Currently, Bitcoin liquidity has plummeted to its lowest since 2018 due to aggressive accumulation by long-term holders, reducing sell-side supply to 3.12 million BTC. This trend underscores a market dominated by whales positioning for future gains, even as Bitcoin trades near $110,000.
How Does Whale Accumulation Affect Bitcoin Scarcity?
Whale wallets associated with long-term investors have amassed approximately 373,700 BTC over the last 30 days, according to data from on-chain analytics platforms like CryptoQuant. This buying activity during market dips reinforces an accumulation phase, where large holders consolidate positions rather than sell. The result is heightened scarcity, with the Liquidity Inventory Ratio (LIR) dropping to 8.3 months—meaning current liquidity could deplete in under nine months at the existing buying rate. Such metrics historically precede significant price rallies, as reduced available supply amplifies demand pressure. Experts note that this structure, combined with sustained institutional interest, creates a bullish environment for Bitcoin’s medium-term outlook.
Bitcoin Market Faces Liquidity Squeeze as Accumulators Dominate
“Analytically, the decline in liquidity, coupled with increased demand from long-term holders, points to a favorable environment for price appreciation in the medium term” – By ArabxChain pic.twitter.com/BOac4eGWQA
— CryptoQuant.com (@cryptoquant_com) October 24, 2025
Despite recent volatility, Bitcoin’s price has declined more than 3% over the past 30 days, trailing 12% from its all-time high of $126,000 recorded on October 7, 2025. The market experienced fresh turbulence on Friday following softer-than-expected U.S. inflation data, which propelled equities to record highs. September’s Consumer Price Index rose 0.3% month-over-month against forecasts of 0.4%, with annual inflation at 3.0%. Core CPI increased 0.2% monthly and 3.0% yearly, both slightly below projections. These economic indicators have bolstered expectations for potential interest rate adjustments, indirectly supporting risk assets like Bitcoin.
The broader digital assets market capitalization edged up marginally on Friday to around $3.73 trillion, though 24-hour trading volume fell 7% to $156 billion. The Fear and Greed Index currently signals “Fear” among traders, mirroring altcoins’ subdued weekly performance. This sentiment contrasts with Bitcoin’s underlying strength, driven by liquidity dynamics that favor patient investors.
What Role Do Bitcoin Futures Play in Market Liquidity?
Derivatives trading underscores renewed vigor in the Bitcoin ecosystem, with Binance reporting total futures volume surging to $2.002 trillion in October, eclipsing September’s $1.95 trillion figure. Bitcoin futures alone accounted for $543.33 billion, representing 27% of the platform’s activity—up from $418 billion the prior month. This escalation highlights a resurgence in institutional and speculative participation, as volumes consistently exceed the $2 trillion mark often associated with bullish momentum. Such high derivatives activity provides additional liquidity layers, allowing traders to hedge or speculate without directly impacting spot markets. Analysts from platforms like Binance emphasize that this trend aligns with gearing up for potential breakouts, further tightening the overall liquidity narrative.
On the spot market front, Bitcoin exchange-traded funds (ETFs) exhibit mixed but recovering demand signals. After a $101.3 million outflow earlier in the week, inflows rebounded to $20.3 million on October 23, following a robust $477 million influx on October 21. BlackRock’s iShares Bitcoin Trust (IBIT) spearheaded with $107.8 million in inflows, trailed by Fidelity’s FBTC at $7.2 million and Bitwise’s BITB at $17.4 million. Conversely, Grayscale’s GBTC faced $60.5 million in redemptions, while Ark 21Shares’ ARKB saw $55 million outflows. These fluctuations reflect diverse investor strategies, yet net ETF activity points to strengthening institutional adoption amid liquidity constraints.
The interplay between declining spot liquidity and surging derivatives volumes creates a resilient market structure. Long-term holders’ dominance reduces immediate selling pressure, while futures provide hedging tools that sustain trading depth. Data from sources like Glassnode and CryptoQuant corroborate this, showing exchange reserves at multi-year lows, which historically correlate with price appreciation cycles. For instance, similar liquidity squeezes in 2020 preceded Bitcoin’s surge past $60,000. Current metrics suggest that if accumulation persists alongside positive macroeconomic cues, Bitcoin could challenge $115,000 by the fourth quarter.
Market participants are closely monitoring U.S. regulatory developments and ETF flows, as these factors could accelerate liquidity shifts. The softer inflation print has reignited debates on Federal Reserve policy, potentially easing monetary conditions favorable to cryptocurrencies. Meanwhile, altcoins lag, with many posting weekly losses amid Bitcoin’s relative stability, highlighting the latter’s role as a market bellwether.
Frequently Asked Questions
What Causes Bitcoin Liquidity to Drop to 2018 Levels?
Bitcoin liquidity has fallen to its lowest since 2018 primarily due to large-scale accumulation by long-term holders, who have added 373,700 BTC in the last month. This reduces available sell-side supply to 3.12 million BTC, creating scarcity even at $110,000 price levels and signaling a bullish accumulation phase.
How Will Declining Bitcoin Liquidity Impact Prices in 2025?
With the Liquidity Inventory Ratio at 8.3 months, declining Bitcoin liquidity could drive prices higher by limiting supply against growing demand. If ETF inflows continue and accumulation holds, experts predict a push toward $115,000 or more by year-end, based on historical patterns of scarcity leading to rallies.
Key Takeaways
- Scarcity Surge: Bitcoin’s sell-side supply at 3.12 million BTC marks a six-year low, fueled by whale accumulation that tightens market dynamics.
- Derivatives Boom: October futures volume hit $543 billion for Bitcoin on Binance, indicating strong institutional interest and liquidity in leveraged trading.
- ETF Recovery: Recent inflows totaling over $500 million to major funds like IBIT signal renewed demand, countering outflows and supporting long-term price stability.
Conclusion
In summary, the sharp decline in Bitcoin liquidity to levels unseen since 2018, coupled with whale accumulation and robust futures activity, positions the market for potential upside amid scarcity-driven pressures. As Bitcoin scarcity deepens and institutional inflows rebound, investors should monitor economic indicators and on-chain metrics closely. Looking ahead, sustained demand could propel Bitcoin toward new highs, offering opportunities for strategic positioning in this evolving landscape.
