Bitcoin's Price Bounce: Liquidity Concerns & CPI Impact

Asia Market Briefing: Bitcoin's Price Recovery Faces Scrutiny

Bitcoin (BTC) experienced a notable recovery, climbing from below $114,000 to around $121,000 recently. Glassnode's analysis points to a shift from "seller exhaustion to a strong rebound near recent ATHs." However, concerns linger about the rally's foundation.

A key question is the sustainability of this move, given the thin liquidity during the period.

Spot Market Participation Lags

Despite the price increase, spot trading volumes have not kept pace. Glassnode data indicates a 22% decrease to $5.7 billion, nearing statistical lows. This suggests the rebound is more attributable to repositioning than widespread buying conviction. While the Spot Cumulative Volume Delta indicated a 94% shift toward buying pressure, it's not yet broadly based.

Derivatives and ETF Flows

Leveraged traders have re-engaged aggressively in derivatives. The Perpetual Cumulative Volume Delta surged by 88%, and options open interest increased by 6.7% to $42.4 billion. Funding rates remained elevated.

ETF flows provided limited support. Outflows from U.S.-listed spot Bitcoin ETFs decreased to $311 million from $686 million the previous week. However, ETF trade volume also dropped by 27.7% to $13.7 billion, remaining near its lower band.

Thin Liquidity and Macro Factors

QCP Capital highlighted that the weekend surge, briefly pushing BTC above $122,000, was influenced by thin order books and a broader risk-on sentiment in global markets. They noted the alignment with a U.S. equities rebound and growing expectations for a September Fed rate cut.

On-chain activity showed some improvement, with active addresses rising 8.4% to 793,000 and fee volume increasing 10%. However, Glassnode cautioned that high profitability levels could trigger selling pressure if sentiment changes. Currently, 94.1% of the supply is in profit, with a realized profit-to-loss ratio of 1.9, suggesting potential for accelerated profit-taking.

The combination of thin liquidity, bullish derivatives positioning, and macro-driven optimism makes Bitcoin vulnerable to volatility as it nears all-time highs.

CPI Data Looms

Tuesday's U.S. CPI release is a key test. Polymarket traders anticipate a modest uptick, potentially leading to BTC consolidation. Higher prints could hinder short-term growth by delaying Fed cuts, while softer readings might catalyze a breakout if ETF flows and spot activity strengthen.

Market Movers

• BTC: Trading around $118k as traders adjust positions ahead of Tuesday’s CPI report.
• ETH: Trading at $4200, supported by increased on-chain capacity and lower DeFi costs.
• Gold: Declined to $3,355.13 due to risk sentiment and tariff news.

Elsewhere in Crypto

• Blue Origin now accepts Bitcoin, Ethereum, and Solana for spaceflights.
• Rumble plans to acquire Tether-affiliated Northern Data.
• Senate Banking Committee staff critique GOP crypto draft bill.