Bitcoin’s Upside Potential Strengthens Amid Tightening Liquidity and Miner Sentiment

The latest report from Bitfinex highlights the resilience of the Bitcoin market amid ongoing volatility. While analysts anticipate a potential correction in early 2025, the prevailing sentiment among miners remains upbeat, suggesting an optimistic outlook for Bitcoin’s performance in the medium term. Notably, the Liquidity Inventory Ratio has drastically decreased from 41 months in October to just 6.6 months, underscoring a significant tightening of Bitcoin liquidity. This trend was particularly pronounced during the strong rebounds observed in the first and fourth quarters of 2024.

Furthermore, as of April 2024, Bitcoin miners, typically large sellers during halving events, have notably curtailed their inflows to exchanges. The liquidity from miners on exchanges has reached multi-year lows, fueled by robust unrealized profits, leading to a preference for holding onto their assets rather than selling. Consequently, the overall selling pressure from miners and long-term holders has lessened considerably, resulting in a tighter supply entering the market, which has helped cushion the effects of recent price corrections.