Bitcoin momentum is constrained by rising global liquidity and paused institutional accumulation, even as long-term holders and a recent 25 bps Fed rate cut provide short-term support for BTC’s rally.
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Rising global liquidity shifts capital toward banks, limiting BTC demand.
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Institutional spot ETF flows paused, with a $51.28M sell-off after $2.3B accumulation.
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Long-term holder accumulation and a Fed 25 bps cut support short-term upside; SOPR rose to ~1.7.
Bitcoin momentum limited by rising global liquidity and institutional pause; learn why long-term holders and Fed policy still support short-term BTC upside — read more.
What is limiting Bitcoin’s momentum?
Bitcoin momentum is limited primarily because rising global liquidity is channeling capital into bank deposits and safer assets, and institutional spot ETF flows have paused, reducing fresh demand for BTC. These forces counterbalance short-term buying from long-term holders and policy-driven liquidity boosts.
How does global liquidity affect Bitcoin?
Global liquidity increased, with bank liquidity near $30.4 trillion and global M2 at about $128.1 trillion. When liquidity rises toward banks, investors often prioritize cash and deposit instruments over risk assets like Bitcoin, which can dampen BTC’s momentum despite higher overall money supply.
Global liquidity rises — Negative for Bitcoin
Data from Alphractal shows a day-over-day surge in global liquidity. While higher money supply normally supports assets broadly, the current rotation favors bank inflows over risk assets.
At press time, the shift in liquidity implied limited capital flowing into Bitcoin, a trend observable since 2022. Rising bank-side allocations can reduce inflows into risk assets and potentially cap BTC upside.
How are institutions behaving with Bitcoin now?
Spot ETF trackers from SosoValue report institutions paused BTC accumulation. After net accumulation exceeding $2.3 billion, institutional flows turned negative with a $51.28 million sell-off in the last session, aligning with the liquidity rotation into safer assets.
Exchange balances ticked higher to ~2.451 million BTC, suggesting increased available supply on exchanges. Historically, rising exchange balances can precede selling pressure as liquidity becomes easier to access for market participants.
What is supporting Bitcoin despite limited momentum?
Two on-chain and macro drivers are supporting the recent rally: continued accumulation by long-term holders and the Federal Reserve’s 25 bps rate cut, which typically increases liquidity available for risk assets, including BTC.
How do on-chain metrics signal support?
The long-term holder SOPR rose to approximately 1.7, a level that often corresponds with price strength. Continued accumulation by long-term holders reduces circulating supply and can offset some downside from exchange inflows.
Frequently Asked Questions
Will rising bank liquidity always hurt Bitcoin?
Not always. Rising bank liquidity can reduce immediate demand for risk assets, but if liquidity eventually flows into risk-on channels—equities or crypto—BTC can benefit later. Context matters: policy, sentiment, and institutional demand all influence outcomes.
How should traders interpret rising exchange balances?
Rising exchange balances often indicate greater sell-side availability, which can pressure price. Traders should combine this signal with flow data and on-chain metrics like SOPR to form a clearer risk assessment.
Key Takeaways
- Liquidity shift matters: Rising global liquidity is currently favoring banks over risk assets, limiting BTC demand.
- Institutional flows paused: Spot ETF data shows a short-term institutional sell-off after prior accumulation.
- On-chain support: Long-term holders and a rising SOPR (~1.7) plus a Fed 25 bps cut provide near-term bullish catalysts.
Conclusion
Bitcoin’s momentum faces headwinds from a rotation of rising global liquidity into safer bank assets and a pause in institutional accumulation. However, steady long-term holder accumulation and the Fed’s 25 bps rate cut are meaningful short-term supports for BTC. Monitor institutional netflows, exchange balances, and SOPR to assess the next directional move.
Author: COINOTAG
Published: 2025-09-18
Updated: 2025-09-18
