Is Bitcoin Entering a Recovery Phase? Liquidity Rises While Holders Capitulate

Source: ETHNews Original Title: Is Bitcoin Entering a Recovery Phase? Liquidity Rises While Holders Capitulate Original Link: https://www.ethnews.com/is-bitcoin-entering-a-recovery-phase-liquidity-rises-while-holders-capitulate/ New data shows that Bitcoin remains tightly correlated with global liquidity trends, and that relationship may now be shifting again. Charts comparing Bitcoin’s price to the Global Liquidity Index highlight a near-perfect overlap between the two.

According to the analysis, global liquidity formed a local top in early October, precisely when Bitcoin also printed its peak and reversed. Over the past week, the liquidity index has started to push higher again. This climb could improve conditions for Bitcoin and other risk assets, which have struggled during the recent liquidity squeeze.

The data shows liquidity and BTC price moving almost in lockstep across 2021-2025, reinforcing the idea that macro liquidity remains the dominant driver of Bitcoin’s major cycles.

Short-Term Holders Face Record Losses

While the liquidity outlook is improving, on-chain stress has reached historic levels. New data reveals that short-term Bitcoin holders are now realizing over $900 million in daily losses, surpassing even the China mining ban capitulation and the FTX collapse.

The analysis shows a massive spike in short-term holder realized loss, matching levels typically seen at deep market capitulation points. Each previous surge in losses occurred near major bottom formations, suggesting that the current pain could signal exhaustion among panic sellers.

Bitcoin’s price remains significantly above prior cycle lows, yet short-term holders are experiencing losses on a scale greater than previous crashes. This mismatch highlights how aggressively leveraged and reactive newer market participants have become during the recent correction.

A Market at a Turning Point

Taken together, the two data sets show a market under intense pressure but potentially nearing a structural shift. Liquidity is improving just as realized losses spike to extreme levels, a combination historically associated with transitional phases rather than prolonged downside.

If global liquidity continues to rise, Bitcoin may find support more easily in the weeks ahead. But until selling pressure cools and volatility stabilizes, traders should expect elevated uncertainty around key levels.