Bitcoin reclaims $102,000 as sell-side liquidity dries up

Bitcoin (BTC) reclaimed the $102,000 price level on Jan. 6 after climbing 4% over the day amid a wider market rally as accumulation continues to outpace profit-taking, based on CryptoSlate data.

The flagship crypto was trading at $101,630 as of press time after failing to sustain upward momentum as US markets closed for the day. The recovery comes as sell-side liquidity continues to shrink, according to the latest Bitfinex Alpha report.

Bitcoin’s return to the $102,000 range comes after a sharp 15% correction from its all-time high (ATH) of $108,100, achieved on Dec. 17, 2024. The correction followed a 61% rally sparked by the US election results on Nov. 6, 2024, signaling robust market optimism.

While analysts predicted a deeper pullback in the first quarter, the report pointed out that emerging metrics suggest the bearish pressure may have largely subsided.

Sell-side liquidity at record lows

A key driver of Bitcoin’s price action is the rapid decline in sell-side liquidity. The Liquidity Inventory Ratio, a metric indicating how long the current supply can satisfy market demand, has plummeted from 41 months in October to 6.6 months.

This steep drop mirrors the liquidity tightening seen during Bitcoin’s rallies in the first and fourth quarters of last year, signaling constrained availability during periods of heightened demand.

Additionally, miners — a significant source of sell-side pressure — have contributed to the current liquidity dynamics, as their spot selling has diminished after the 2024 halving.

Historically, miners sell Bitcoin to fund operations and machinery upgrades, but miner-to-exchange flows have slowed significantly since April 2024. Although miner flows increased in November last year, these levels remain far below previous peaks.

According to Bitfinex, miners are now in a strong position, supported by substantial unrealized profits. This holding behavior has further tightened liquidity, bolstering Bitcoin’s upward trajectory.

The data suggests a broader trend where miners retain their BTC holdings as they anticipate higher prices or seek to optimize their positions amid favorable market conditions.

Starting strong

The report highlighted that Bitcoin is starting 2025 on a firm footing, translated by positive on-chain metrics. It added that the interplay between diminishing sell-side liquidity will remain a pivotal factor in Bitcoin’s price movement.

While the risk of a deeper pullback still lingers, liquidity metrics at multi-year lows and miners signaling confidence through their holding patterns suggest that much of the downward pressure has eased, setting the stage for potential further gains.