The post Bitcoin’s Price Stability May Be Supported by Declining Sell-Side Liquidity, Analysts Suggest appeared on BitcoinEthereumNews.com.

Bitcoin’s recent market dynamics indicate a potential stabilization in price as sell-side liquidity continues to decrease, according to Bitfinex analysts. Recent trends suggest that the worst of Bitcoin’s downward price pressure may be behind, with a notable drop in active sellers on exchanges heightening bullish sentiments. “This significant decline aligns with the rallies observed in both Q1 and Q4 of 2024,” Bitfinex analysts reported, highlighting patterns of market activity. Bitcoin’s liquidity is tightening, signaling a bullish trend as trading volumes fluctuate. Is the crypto asset primed for a price rebound? Read more. Declining Liquidity Inventory Ratio Signaling Bullish Sentiment for Bitcoin Investors According to recent insights from Bitfinex analysts, Bitcoin’s liquidity inventory ratio has seen a **dramatic decline**, dropping from **41 months** in October 2024 to just over **6.5 months**. This decline in liquidity indicates that the current supply is becoming increasingly scarce relative to demand on exchanges. A reduced supply generally enhances the asset’s value perception, often leading to price increases. Bitcoin’s price movements have been closely correlated with changes in liquidity. The analysts observed that this tightening supply of BTC had often coincided with robust market rallies in Q1 and Q4 of 2024. Specifically, as available liquidity shrinks, traders anticipate potential price increases, creating a **scarcity narrative** that often enhances purchasing interest. Market Resilience Amidst Selling Pressure Despite the volatility, analysts argue that the current market conditions signify a resilient trend for Bitcoin. At the time of writing, Bitcoin’s price is hovering around **$96,880**, a strong figure considering past fluctuations. Earlier in January, after a brief spike above **$100,000**, the asset faced corrections but remained resilient against larger downward trends. Increased accumulation strategies among long-term holders bolster confidence in Bitcoin’s upward trajectory, even amidst choppy market conditions. Frequent trading volumes provide essential liquidity, but a downturn in sell-side…

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Filed under: News - @ January 8, 2025 2:19 am