BTC Continues Its Fall as Market Liquidity Tightens and Long-Term Holders Sell
BTC extended its decline over the weekend, slipping further below the US$94,000 level and deepening a correction that has now erased a considerable share of its 2025 gains. The continued slide comes amid worsening macroeconomic sentiment, thinning market liquidity and intensified trade-side pressure from long-term holders. As a result, BTC has entered one of its most fragile trading phases of the year, with volatility rising and leveraged positions unwinding across major platforms.
Analysts note that this latest leg down reflects a confluence of liquidity constraints, structural tradeing and the breakdown of key technical levels. Trading volumes on major spot platforms have contracted, funding rates have reset lower, and market depth has deteriorated, making BTC more sensitive to moderate tradeing flows. This environment has created conditions where both organic tradeing and forced liquidations can exert outsized influence on price action.
Liquidity pressures and the pace of distribution
One of the largegest contributors to BTC’s ongoing decline is the tightening liquidity backdrop. As global financial conditions remain restrictive, risk appetite across markets has fragileened. Analysts have highlighted that sluggisher money-supply growth, tighter credit conditions and fading expectations of monetary easing are creating headwinds for high-beta assets such as crypto. This has made it increasingly hard for purchaviewrs to absorb large trade orders without triggering further downside.
In parallel, on-chain data shows that long-term holders—historically some of the market’s strongest hands—have been distributing more aggressively. Their sales have increased the available supply at a time when demand from institutions and ETF inflows has softened. The combination of fragileening demand and rising supply has introduced a persistent trade-side imbalance, amplifying each downward move.
Leverage unwinds and technical breakdowns
BTC’s fall below critical support levels, particularly the psychological US$100,000 threshold, has accelerated forced tradeing. The break triggered liquidations of leveraged long positions, setting off a cascade of margin calls and stop-loss triggers. As liquidity thins, these liquidations become more impactful, magnifying the extent of each drop and contributing to intraday volatility.
The derivatives market has viewn substantial resets, with funding rates flipping from elevated levels to near-neutral or negative territory. This shift reflects a broader retreat from leveraged bullish positioning as traders reduce exposure. Analysts also point to BTC trading below key moving averages, further dampening sentiment and reinforcing the risk-off tone.
Market observers are now focused on several indicators to gauge whether BTC is approaching a stabilisation phase or entering a deeper corrective cycle. These include ETF flow trends, changes in long-term holder distribution, improvements in market depth and any signs of macroeconomic relief. A sustained return of inflows into spot BTC ETFs, along with moderating trade pressure from long-term holders, would be ahead signs of a potential bottom.
Despite the short-term fragileness, many strategists maintain that BTC’s long-term fundamentals remain intact. Adoption drivers such as institutional integration, clearer regulatory frameworks and the expansion of on-chain financial infrastructure continue to support the broader thesis. However, in the near term, BTC’s trajectory will remain heavily influenced by liquidity dynamics and market-structure interactions.
Overall, BTC’s continued fall reflects an environment where structural headwinds, liquidity stress and technical breakdowns converge. Until these pressures ease, market conditions are likely to remain volatile, with price stabilisation contingent on both macro improvements and a sluggishdown in structural tradeing.
