Bitcoin Struggles to Surpass $90,000 Amid Decreased Liquidity and Lack of New Buyers

• Bitcoin continues to grapple with resistance below $90,000 as declining liquidity and a lack of new investors create a challenging market environment.

• Current market trends indicate a top-heavy distribution of Bitcoin holdings, predominantly among those who purchased at higher prices, leading to sustained sell pressure.

• According to Glassnode’s latest analysis, the volume of short-term holders currently holds 3.4 million BTC in losses, the highest since July 2018.

This article explores the factors behind Bitcoin’s struggle to surpass $90,000, focusing on liquidity, market dynamics, and supply concentration issues.

The Factors Restraining Bitcoin Below $90K

One significant barrier for Bitcoin’s price is persistent sell-side pressure from short-term holders (STHs)—those who have held their BTC for less than 155 days. Insights from Glassnode’s “The Week On-chain” newsletter reveal that the current Bitcoin cycle is characterized as top-heavy, where a considerable amount of Bitcoin supply is in the hands of investors who bought at elevated prices. Consequently, this STH demographic is encountering the most substantial price drawdown since the cryptocurrency’s notable 30% correction from its peak.

In their report, analysts from Glassnode highlighted:

“The volume of Short-Term Holder supply held in loss is surging to a massive 3.4M BTC. This is the largest volume of STH supply in loss since July 2018.”

The growing losses among short-term holders translate into significant selling pressure, as observed in Bitcoin’s accumulation trend score. This metric, which gauges the relative health of buying versus selling, has stagnated below 0.1 since Bitcoin’s price drop from highs of $108,000 to the $93,000-$97,000 threshold. Values under 0.5 typically indicate that distribution is ongoing rather than accumulation, signifying intense selling activity.

Compounding these issues are deteriorating liquidity conditions. Recent data indicates that onchain transfer volumes have fallen to $5.2 billion daily, representing a substantial 47% decline from peak levels witnessed during the rally to all-time highs. Furthermore, the number of active addresses has decreased by 18%, plummeting from 950,000 in November 2024 to about 780,000.

This diminishing engagement is echoed in the futures market, where open interest has nosedived by 24%, declining from $71.85 billion to $54.65 billion, alongside a cooling of perpetual futures funding rates. Such deleveraging, coupled with only 2.5% of Bitcoin’s total supply currently profiting during this downturn, undermines the market’s ability to mount any significant rally past the $90,000 barrier.

Declining Demand for Bitcoin

Further aggravating Bitcoin’s price challenges is a marked decline in new demand entering the marketplace. Data from Glassnode illustrates a concerning trend, where the Cost Basis Distribution (CBD) Heatmap reveals a concentration of supply at higher price levels ($100K-$108K), without a corresponding influx of buyers willing to purchase at lower price points that would support a price rebound.

This lack of demand is exacerbated by existing macroeconomic uncertainties discouraging new entrants into the market. Current trends indicate a shift to net capital outflows, particularly evident when the 1-week to 1-month STH cost basis falls below that of the 1-month to 3-month cost basis.

Despite these challenges, analysts observed,

“The flip side of these observations is that the Long-Term Holder cohort still retains a substantial portion of the network wealth, holding almost 40% of invested value.”

This scenario indicates that while immediate market conditions appear precarious, periods of sustained accumulation by long-term holders can eventually tighten supply. Such a situation may set the stage for renewed demand and price recovery once a clearer upward market trajectory is established.

Conclusion

Bitcoin’s struggle to breach the $90,000 mark is a multifaceted issue involving liquidity constraints and decreasing demand amongst new buyers. Short-term holders’ selling behavior coupled with a sluggish influx of new capital has created an environment where upward movement remains severely limited. However, the ongoing accumulation by long-term holders could provide a foundation for future recovery, as tight supply conditions in the long run may spur renewed interest in BTC.