Declining Market Liquidity Signals Potential Bearish Phase
According to Ki Young Ju, founder of CryptoQuant, Bitcoin’s bull market cycle could be nearing its end. Ju highlights declining liquidity as a critical concern, suggesting the market may face 6–12 months of sideways or bearish price action.
Key observations from Ju’s analysis:
- Stalled capital inflows: The on-chain realized cap shows no fresh liquidity entering the market.
- ETF outflows: BlackRock’s IBIT experienced three consecutive weeks of outflows.
- Price stagnation: Despite near-record trading volumes, BTC’s price failed to rally significantly.
👉 Why liquidity matters in crypto markets
Valuation Metrics Point to Overextended Market
A recent CryptoQuant report identified bearish signals from key indicators:
- MVRV Ratio Z-score: Dropped below its 365-day moving average, historically preceding corrections.
- Critical support levels: $75K–$78K must hold to avoid deeper declines.
- Weakening demand: Slowing whale accumulation and net ETF sell-offs add downward pressure.
| Metric | Current Signal | Historical Implication |
|----------------------|----------------------|--------------------------------|
| MVRV Z-score | Below 365-day MA | Early bear market indicator |
| Whale Activity | Net Selling | Reduced bullish momentum |
Macroeconomic Risks Amplify Bearish Sentiment
Analysts warn that external factors could exacerbate crypto’s downturn:
- U.S. equity weakness: Joel Kruger (LMAX Group) ties BTC’s performance to broader market uncertainty.
- Stagflation fears: David Duong (Coinbase Institutional) notes rising global tensions may curb risk appetite.
- Polymarket odds: Traders assign a 51% probability BTC ends the week at $81K–$87K, with 31% betting on $75K by month’s end.
👉 How macro trends impact Bitcoin
FAQs: Addressing Key Concerns
Q: What does the MVRV Z-score indicate?
A: It measures whether Bitcoin is overbought/oversold. A drop below the 365-day MA often precedes bearish phases.
Q: Are institutional investors leaving Bitcoin?
A: Yes—U.S. spot ETFs and whale wallets show net outflows, reducing buy-side pressure.
Q: Could BTC rebound soon?
A: Possible, but fresh liquidity (e.g., new institutional capital) is needed to offset selling.
Conclusion: Navigating Market Transitions
While Bitcoin’s long-term outlook remains debated, short-term signals suggest caution. Traders should monitor:
- Liquidity trends (on-chain data).
- Macroeconomic developments (U.S. equities, geopolitics).
- Key support levels ($75K–$78K).
Stay updated with CryptoQuant’s real-time analytics for data-driven insights.
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