Bitcoin Sell-Off Eases as Market Liquidity Contracts, TradingView News Reports

Analysts within the crypto sector postulate that Bitcoin may have encountered the brunt of its bearish trend in the near term, as evidenced by the notable decrease in sellers across trading platforms.

“The available amount of Bitcoin for sale is contracting swiftly,” stated Bitfinex’s market specialists in their report dated January 6.

A lower liquidity inventory ratio favors Bitcoin enthusiasts

In their analysis, they remarked that the liquidity inventory ratio of Bitcoin, an indicator of the time the existing Bitcoin supply would satisfy market demand on exchanges, fell from a span of 41 months in October 2024 to merely above 6.5 months currently.

For individuals trading cryptocurrencies, such a reduction in supply implies the asset’s scarcity is becoming more pronounced, which traditionally leads to price escalation.

“The pronounced drop coincides with market surges in the first and last quarters of 2024, suggesting a consolidation of liquidity amid heightened market action,” commented the analysts from Bitfinex.

As of this writing, Bitcoin’s valuation is at $96,880, according to CoinMarketCap data.

On January 6, the Bitcoin valuation briefly returned to the $100,000 threshold, the first instance since December 20, only to retract to a low of $96,261 within the next 24 hours.

An online crypto analyst going by “Daan Crypto Trades” expressed on January 7 that it would indeed be compelling to observe Bitcoin’s short-term price trajectory. 

“Market volatility is typically present at the close and outset of a year, and currently, the market is fluctuating as such,” stated Daan.

Furthermore, the Bitfinex market researchers mentioned that a substantial reduction in Bitcoin transfers from miners to exchanges in 2025 hints at an optimistic outlook from miners on price projections.

Expert notes a slowdown in market demand as well

“Miners, being in the green, benefit from the dominant upbeat trend, which permits smoother operations, hence they are electing to retain their Bitcoin instead of selling it,” said the Bitfinex analyst.

They previously projected in December 2024 that Bitcoin’s price could achieve a minimum of $145,000 by mid-2025, with the potential to soar to $200,000 in a favorable climate.

Concurrently, Glassnode’s leading analyst James Check indicated in a market review on January 7 that even though Bitcoin’s sell-off is subsiding, demand signals are also waning.

“Current holders are showing reduced sell-side pressure yet some metrics reflect a dampening in new demand,” Check observed, pointing out the “drastic 53% reduction in spot trading volume since November.”

During November 5 to 23, 2024, Bitcoin’s valuation surged by approximately 46%, cresting at $99,006 before breaking the $100,000 level on December 5.

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