Bitcoin Defies Gravity Above $117K - But Global Liquidity Headwinds Threaten BTC’s Ascent

Bitcoin's bull run isn't blinking—holding firm above the $117,000 threshold as institutional money keeps pouring in. The digital gold narrative gains more believers by the day, yet seasoned traders know better than to celebrate prematurely.

Global Liquidity: The Unseen Anchor

Central banks worldwide keep playing musical chairs with quantitative easing—because who needs fiscal responsibility when you can just print more money? This liquidity tsunami initially propelled risk assets skyward, but now creates underlying volatility that could yank BTC's momentum straight into turbulence.

Market technicians spot divergence patterns forming—price action holding strong while liquidity indicators flash warning signals. It's the classic 'don't fight the Fed' dilemma, crypto-style.

Meanwhile, crypto maximalists shrug off traditional finance concerns—after all, Bitcoin was built to bypass broken monetary systems. But even decentralized assets can't completely escape the gravitational pull of global capital flows.

So enjoy the ride while it lasts—just keep one hand on the exit lever. Because when the liquidity music stops, someone's always left holding the bag (probably the same hedge funds that still think 'blockchain' is a spreadsheet upgrade).

Key Takeaways

Why might Bitcoin’s momentum remain limited?

Global liquidity is rising, driving capital toward safer assets like banks, while institutional investors paused BTC accumulation.

What factors are supporting Bitcoin’s short-term rally?

Long-term holders are accumulating BTC, while the Fed’s 25 bps rate cut acts as a bullish catalyst for Bitcoin.

Bitcoin [BTC] continued its rally in the past day, with the asset closing above $117,000 on the chart.

Though this close coincided with rising global liquidity, it might be unfavorable for the asset. AMBCrypto paints a clear picture of what is happening.

Global liquidity rises — Negative for Bitcoin

There has been a surge in global liquidity over the past day, according to from Alphractal. Ideally, this should imply that assets, including Bitcoin, should rise as more capital flows into the global market.

However, the current scenario is not entirely positive for Bitcoin. A rise in global liquidity often results in stronger inflows into banks, while Bitcoin tends to drop—a pattern that has persisted since 2022.

Source: Alphractal

At press time, bank liquidity was at $30.4 trillion, while the global money supply (M2) was at $128.1 trillion, with both continuing to rise.

This suggested that capital flowing into Bitcoin, a known risk asset, could remain limited as more investors allocated funds into safer asset classes.

AMBCrypto also examined how institutional investors are behaving, finding their actions in line with global liquidity trends.

Institutions pause Bitcoin accumulation

Institutional investors have put their buying activity on hold, according to SosoValue, which tracks bitcoin spot exchange-traded funds (ETFs).

After accumulating more than $2.3 billion worth of Bitcoin, these investors made a sharp turnaround in the past day, selling off $51.28 million worth of BTC.

Source: SosoValue

This movement aligns with the global liquidity rise, implying that traditional investors are rotating capital accordingly.

During the same period, the amount of Bitcoin available on exchanges recorded a slight increase, with 2.451 million BTC now circulating in the market.

When exchange balances rise, it often indicates a potential sell-off, pushing the asset’s price lower as liquidity becomes more readily available.

AMBCrypto took the analysis a step further, examining what factors could still be driving Bitcoin forward, and found two key indicators.

Long-term holders and Fed policy boost Bitcoin

The recent rally appears linked to long-term holders’ profitability and their continued accumulation without selling.

At the time of the report, the SOPR Ratio had risen slightly to 1.7, a notable level that often coincides with upward price momentum.

Source: CryptoQuant

More importantly, the Federal Reserve’s decision to cut interest rates by 25 bps has been a major catalyst. This MOVE has historically been associated with more liquidity flowing into Bitcoin, boosting its price action.