đ Although I firmly believe Bitcoin will reach $1M per BTC, I still decided to take profits on a significant portion of my Bitcoin holdings around the $100,000 mark.
đ Itâs not that I could predict todayâs correction, but rather thanks to experience, disciplined risk management, and capital preservation strategies.
đ If we look closely at previous bull runs, whenever Bitcoinâs price surged too fast within a short period, it often left behind a âliquidity gap.â The same happened during the rally in November 2024, when BTC soared rapidly, creating a liquidity gap between $72,000 and $90,000.
đ This zone lacks substantial buy/sell activity, meaning that when Bitcoin retraces into this liquidity void, prices tend to drop rapidly due to weak support. Historically, most liquidity gaps eventually get filledâitâs only a matter of time.
đ Not only Bitcoin but most assets behave similarly around liquidity gaps because of these key factors:
1ď¸âŁ Magnet Liquidity Effect â Liquidity acts like a magnet. Market makers push prices back into these gaps to absorb unfilled liquidity orders, restoring market equilibrium.
2ď¸âŁ Market Structure & Re-Accumulation â After a major rally, institutions & whales need to accumulate more positions at lower price levels, causing prices to revisit prior liquidity voids.
3ď¸âŁ Market Inefficiency â Self-Correcting Mechanism â Markets naturally retest unconfirmed price levels to ensure a more accurate reflection of real supply and demand.
4ď¸âŁ Stop-Hunt & Liquidity Sweeps â Market makers and whales often drive prices back to liquidity gaps to trigger stop-losses of retail traders, causing cascading liquidations.
đ Why is now a critical moment for filling the liquidity gap?
1ď¸âŁ U.S. CPI inflation is rising again, and the FED has hinted at delaying rate cuts until at least Q3 2025.
2ď¸âŁ Uncertainty over trade wars & tariffs initiated by Trump, which could significantly impact the U.S. economy.
3ď¸âŁ A cautious and pessimistic sentiment in U.S. stock markets, increasing overall market volatility.
4ď¸âŁ FEDâs ongoing quantitative tightening (QT) â The FEDâs balance sheet shows a continuous decline in total assets, indicating liquidity is being drained from the economy.
5ď¸âŁ Cooling off the market after an overheated rally, as leverage positions across exchanges remain at high levels, making the market vulnerable to liquidations.
đĽ Overall, this
$BTC correction isnât surprising. The fundamental growth of the market remains strong, so thereâs no reason to be overly bearish or assume that the long-term trend has shifted.
#bitcoin #corrections #liquiditygrap