Bitcoin Liquidity Squeeze Worsens as Spot Trading Activity Hits Seven-Year Low

Bitcoin's spot trading activity has plummeted to its weakest level since early 2019, indicating a significant liquidity squeeze in the market. According to Bitfinex Alpha, U.S. spot Bitcoin ETFs have recorded $385.2 million in weekly net outflows, further exacerbating the situation.

The onchain activity is also subdued, with Bitcoin transfer velocity at a seven-year low. Stablecoin supply has contracted by 4.5% from its May peak, falling to $300.7 billion, indicating that fresh capital has yet to return to the market.

Bitfinex Alpha notes that Bitcoin's price action is displaying characteristics typically associated with the middle-to-late stages of a bear market. The cryptocurrency remains between two key cost-basis levels: the long-term realized price at $52,699 and the short-term holder realized price at $67,176.

A loss of support for the median realized price near $63,200 could shift attention toward Bitcoin's June low of $57,803. The report emphasizes that renewed growth in stablecoin supply and a return to net inflows for U.S. spot Bitcoin ETFs are key indicators for the market.