Bitfinex Alpha Issues Bitcoin Liquidity Alarm: Spot Trading Volume Hits Lowest Level Since 2019

Bitfinex Alpha emphasized the importance of the $63,200 support level, stating that the price is exhibiting mid-to-late bear market characteristics due to drying liquidity and weakening trading activity in the Bitcoin market.

According to the report, trading volume in the Bitcoin spot market has fallen to its lowest level since early 2019. On-chain velocity has also dropped to a seven-year low. This indicator measures the frequency at which Bitcoins change hands on the network and reveals that market participants are trading less. This slowdown, combined with low volume, indicates that liquidity in the crypto market has significantly weakened.

The liquidity crunch was also reflected in fund flows. U.S. spot Bitcoin ETFs recorded a weekly net outflow of $385.2 million. Stablecoin supply fell approximately 4.5% from its May peak to $300.7 billion. Bitfinex Alpha noted that these data points indicate that additional liquidity has not yet returned to the market.

The critical threshold for Bitcoin price is $63,200

Evaluating this outlook alongside the Bitcoin price, Bitfinex Alpha noted that the market resembles mid-to-late bear market conditions. The Bitcoin price is moving between the long-term realized price of $52,699 and the short-term holder realized price at the $67,176 level. In the chart showing the cost basis of different investor groups, it is observed that the realized price median at approximately $63,200 has served as support over the last two weeks. If this level is broken, the $57,803 low recorded in June could come back into play.

The report stated that developments such as softening U.S. inflation data, loosening financial conditions, and stocks reaching record highs have not yet provided support to the crypto market. According to Bitfinex Alpha, for a recovery to be observed, ETF inflows must strengthen again and the stablecoin supply must begin to grow.