In the current cryptocurrency market, the retreat of liquidity can no longer be ignored. Whether on-chain or on platforms, the overall trading activity has significantly decreased compared to the past, and market sentiment is becoming cautious.
From on-chain data, if we refer to the peaks of the past two phases, it is not difficult to see the significant gap. In March 2024, Bitcoin's average daily turnover reached 150,000 (7-day average), rising to 160,000 in November of the same year, while now this number is only about 85,000, almost halved.
(Figure 1)
It is worth noting that when Bitcoin rebounded to $95,000 on April 28, on-chain activity reached a peak in this market cycle. This price point is near the average cost line of short-term holders, indicating that a large amount of short-term funds chose to cash out at that time. Although the price continued to rise afterward, the on-chain turnover gradually decreased, and the internal trading willingness in the market clearly cooled down.
The spot market is also showing a similar trend. During the two peaks in 2024, the platform's average daily trading volume ranged between 210,000 to 260,000 BTC, whereas currently, it is only about 60,000 BTC, representing a significant decline. Especially after Bitcoin first surpassed $110,000 on May 22, the trading volume did not increase in tandem with the price. Even when it reached $110,000 again on June 9, the trading enthusiasm still showed no significant improvement.
(Figure 2)
Various signs indicate that in the current low liquidity state, the market is more susceptible to being driven by short-term funds and emotions, making price fluctuations more random. A slight disturbance may trigger drastic price changes. As investors, we must realize that abundant liquidity is the foundation of a healthy market cycle. When the market gradually enters a 'liquidity vacuum,' it also means that the sustainability of the trend will face challenges.
