Bitcoin Stays Steady Below $90K Amid Market Conditions

Bitcoin is currently trading around $88,000, but signs indicate that the market is experiencing low participation, making it difficult for prices to rise above $90,000. Data shows a decline in network activity and exchange liquidity, resulting in tighter market conditions.

Key Takeaways:

Bitcoin trades near $88,000 as network engagement declines to annual lows, along with reduced selling pressure.
Significant decreases in inflows on exchanges like Binance and Coinbase suggest a tightening of liquidity.

Bitcoin Stays Steady Below $90K Amid Market Conditions

Bitcoin Network Activity Declines Amid Stable Prices

Recent data from CryptoQuant indicates a decline in Bitcoin’s network activity. The 30-day moving average of active addresses has fallen to approximately 807,000, marking the lowest point in a year. This suggests decreased involvement from both individual investors and short-term traders.

Decline in Bitcoin Active Addresses Bitcoin active addresses decline. Source: CryptoQuant

The trend in exchange activity further confirms this situation. Both the number of depositing and withdrawing addresses on Binance has decreased, reaching annual lows. This reflects a market stalemate where low deposit activity indicates long-term holders are not in a hurry to sell, which helps to keep sell-side pressure low. Simultaneously, subdued withdrawal activity suggests that aggressive buying has stalled as investors remain cautious.

Reduced Liquidity as Exchange Inflows Decline

Looking at exchange inflow data reveals how liquidity conditions have shifted even while prices remain stable. On November 24, when Bitcoin was priced around $88,500, Coinbase saw cumulative inflows of $21 billion over seven days, and Binance saw $15.3 billion, indicating active market maneuvering.

Bitcoin Exchange Inflows Bitcoin, Ether exchange inflows on Coinbase, Binance. Source: CryptoQuant

However, by December 21, Bitcoin was still trading at $88,500, but inflows on Coinbase plummeted nearly 63% to $7.8 billion, while Binance experienced only a modest drop to $10.3 billion. This indicates a notable reduction in new liquidity, which points to a slowdown in short-term trading activity and tighter overall market conditions.

Technical Levels to Watch for Bitcoin's Next Movement

From a technical perspective, Bitcoin is currently confined within a price range of $85,000 to $90,000, struggling to sustain any breakouts above resistance levels. The price remains below the monthly volume-weighted average price (VWAP), suggesting a cautious to neutral market sentiment.

Bitcoin four-hour chart. Source: Cointelegraph/TradingView

Liquidity areas on Binance reveal two significant points of interest. On the downside, there's a buy-side fair-value gap (FVG) between $85,800 and $86,500, which contains a dense aggregation of leveraged long positions. Entering this zone could place over $60 million in long positions at risk of liquidation, marking it as a potential target for downward liquidity.

Conversely, the unfilled upside sell-side FVG between $90,600 and $92,000 has approximately $70 million in short positions vulnerable to liquidation. With clearly defined liquidity levels above and below the current price, Bitcoin’s short-term trajectory will likely be influenced by which side of this range gets tested first.

Bitcoin liquidation heatmap. Source: CoinGlass