Bitcoin (BTC) is going through a tense period. Over the past week, its price has dropped by 3.7%, just as market activity becomes increasingly uncertain. After peaking above $123,000 in early July, Bitcoin now trades around $114,420 — and analysts warn this could be the start of a deeper correction.
🔹 Market fragility exposed by drying liquidity
Analysts from Arab Chain, contributors to CryptoQuant’s QuickTake platform, highlight a sharp decline in Bitcoin's liquid reserves. Currently, exchanges hold only about three months’ worth of supply — a scenario that sets up a “thin market”.
In such conditions, even small sell orders can lead to significant price drops. “Without consistent capital inflows from institutions or ETFs, even minor sell-offs can trigger major price slumps,” warns Arab Chain.
🔹 Buyers missing, price lacks support
Normally, limited supply would push prices higher — if demand were strong. But right now, that demand is absent. While supply is tightening, large investors remain hesitant to accumulate.
On-chain data reveals that "smart wallets" — high-value addresses — are only buying modest amounts. This slow accumulation fails to counterbalance the selling pressure.
🔹 ETF flows remain erratic
A key contributor to this volatility is the inconsistent demand for Bitcoin ETFs. Arab Chain observes wild swings — surges in inflows quickly followed by large outflows. This erratic behavior leaves prices without reliable institutional support.
Since their approval in January, ETFs have been major drivers of Bitcoin demand — but that momentum is now faltering. Without steady institutional interest, market downturns become more difficult to control.
🔹 What’s next? Watch the whales
Whether Bitcoin can regain stability depends on the return of major players. If ETF inflows recover and smart wallets ramp up their purchases, the market could stabilize.
Until then, BTC remains vulnerable. Its future trajectory will be shaped largely by whether demand returns — and whether the market can recover from its current fragility.
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