Bitcoin Price Stability Amid Macroeconomic Uncertainty
Macroeconomic uncertainty is currently playing a significant role in keeping Bitcoin (BTC) within a tight price range. The latest “Bitfinex Alpha” report highlights how liquidity is contracting due to declining speculative interest and trading volumes.
Large Investors’ Interest Needed for Price Movement
The report emphasizes the importance of large investors’ interest in pushing Bitcoin out of its current range. Last week, Bitcoin briefly surged after opening near $82,791, driven by speculation surrounding former President Donald Trump’s speech at the Digital Asset Summit. However, the rally was short-lived, turning into a “sell-the-news” event that temporarily pushed BTC down to $81,366 before closing the week up 4.2% following an optimistic FOMC meeting.
Outlook: Lackluster Momentum and Market Indicators
Despite the modest weekly gain, underlying market indicators suggest waning momentum for Bitcoin. Volatility and liquidity have declined, indicating a stronger correlation between Bitcoin’s price movements and macroeconomic developments. Investors are split on the direction of monetary policy, leading to reduced speculative conviction and increased sensitivity to external policy cues.
Decline in Short-Term Trading Activity
- Bitcoin’s “Hot Supply” has decreased from 5.9% to 2.8% of the total circulating supply since December 2024.
- This reduction reflects a decline in short-term trading activity and market participation.
- Investors are transacting fewer coins, with active trading behavior on the decline.
Reduced Exchange Inflows
- Bitcoin exchange inflows have dropped from 58,600 BTC per day to 26,900 BTC, a 54% decline.
- This decrease in coins sent to exchanges indicates subdued market activity and weakened demand-side pressure.
Liquidity Conditions and Market Sentiment
The diminishing Hot Supply and reduced exchange inflows signify weakened demand-side pressure and a wait-and-see approach among market participants. This risk-off sentiment reflects a cautious stance across the digital asset market, with both institutional and retail players hesitant to initiate new positions without clearer macroeconomic signals.
Bitcoin’s price movements are currently more influenced by shifts in liquidity conditions and global economic sentiment rather than internal crypto market developments. The contraction in liquidity and decline in speculative behavior serve as key indicators of the prevailing cautious sentiment in the digital asset market.
