Bitcoin is caught in a liquidity stalemate and BTC price volatility catalysts are so far lacking, says new research.
Bitcoin (BTC) remains stuck below $43,000 this week as even institutional buying has little impact on markets.
BTC/USD 4-hour chart. Source: TradingView
Liquidity keeps Bitcoin bulls bound
Since dropping 15% in two days last week after the launch of the first United States spot exchange-traded funds (ETFs), Bitcoin has underwhelmed traders.
While so far not delivering further downside, bulls likewise lack the momentum to bring BTC/USD back to even the top of its broader trading range with $48,000 as its ceiling.
Examining which hurdles lie in the way, however, trading resource Material Indicators flagged a key problem: too much liquidity around spot price.
“That is precisely why BITCOIN has been trading sideways with price pinned between $41.5k – $44k since Saturday.”
BTC/USDT order book liquidity data for Binance. Source: Material Indicators/X
Material Indicators presented a heatmap of BTC/USDT order book liquidity on largest global exchange Binance, showing a haze of bid support between $42,000 and spot at around $42,500.
“On the weekly view of the binance order book we can see that another $10M+ in BTC bids has moved above $42k, but resistance above $43.5k has been strengthening,” it continued.
Since Bitcoin fell below $44,000, significant seller interest has appeared both there and at $45,000, the heatmap additionally confirmed.
Material Indicators concluded that there were no clear candidates for shaking up the market in the short term.
Analyst: “No wonder” BTC price came off highs
Various other theories for why Bitcoin is not reacting to the ETF launch with snap gains meanwhile continue to surface.
In his own X post on the day, Philip Swift, creator of statistics resource Look Into Bitcoin, flagged a classic signal on its Value Days Destroyed (VDD) Multiple metric.
VDD, which multiplies the existing Coin Days Destroyed metric by the current BTC price to compare spending velocity over time, typically marks a local top when it passes 1.5, Swift explains.
“Value Days Destroyed Multiple reached frothy levels for this early stage of the cycle,” he wrote alongside a print of the indicator.
“No surprise that bitcoin price needed to cool down.”
Value Days Destroyed (VDD) Multiple. Source: Philip Swift/X
As Cointelegraph reported, VDD suggested that Bitcoin was in an early stage bull market in July last year.
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