Bitcoin has recently staged a dramatic comeback, leaping from a dip below $114,000 to flirt with the $121,000 mark. While this resurgence has sparked excitement within the market, it also raises eyebrows given the underlying conditions. According to a recent Glassnode report, the rebound appears to be more about shifting trader positions than a result of strong buying conviction. This mirrors a trend seen in our previous analysis of Bitcoin’s Post-ATH Amnesia: Price Trapped in “Low-Liquidity Air Gap”, where similar market dynamics were observed.
Thin Liquidity: A Double-Edged Sword
The latest rally in Bitcoin comes amid low spot market participation. Glassnode data reveals a 22% drop in spot trading volumes, which now hover around $5.7 billion—a level close to historical lows. This suggests that the bounce is largely driven by positioning shifts, with the Spot Cumulative Volume Delta flipping 94% toward buy pressure. The absence of deep conviction buying is palpable, raising questions about the rally’s staying power.
On the derivatives front, however, traders are far from complacent. Glassnode’s insights reveal an 88% surge in the Perpetual Cumulative Volume Delta, indicating that leveraged traders are back in the game. Further evidence of bullish sentiment is seen in the 6.7% rise in options open interest, now at $42.4 billion. Yet, the collapse of volatility pricing by nearly a third suggests a sense of complacency, a pattern that has historically been a precursor to significant market shifts.
Macro Factors and Market Sentiment
Over the weekend, Bitcoin managed to briefly breach the $122,000 mark, a move attributed to thin order books and a global risk-on shift. QCP Capital, a Singapore-based trading firm, noted that this surge coincided with a rebound in U.S. equities and burgeoning expectations for a Federal Reserve rate cut come September. The sentiment appears buoyed by macroeconomic optimism, yet the market remains on a knife-edge as Tuesday’s U.S. Consumer Price Index (CPI) release looms.
While on-chain activity shows signs of life—active addresses jumped 8.4% to 793,000, and fee volume rose by 10%—Glassnode warns that elevated profitability levels could quickly pivot to selling pressure if sentiment takes a turn. With 94.1% of the Bitcoin supply in profit, the market is precariously close to a profit-taking spree, a shift that could stall the rally. This scenario echoes concerns highlighted in Asia Morning Briefing: Bitcoin Slips Into Low-Liquidity ‘Air Gap’ as Post-ATH Drift Continues, where similar liquidity challenges were discussed.
The Road Ahead: Uncertainty and Opportunity
As Bitcoin inches toward its all-time highs, the combination of thin liquidity and macroeconomic optimism primes the market for volatility. The imminent U.S. CPI report could prove pivotal. Polymarket traders are betting on a modest uptick, aligning with consensus views that might keep Bitcoin in consolidation. On the flip side, a hotter-than-expected print could delay anticipated Fed cuts, posing short-term headwinds, while softer readings might offer a breakout catalyst if ETF flows and spot activity gain traction.
Elsewhere in the crypto sphere, Ethereum is trading at $4,200, buoyed by increased on-chain capacity and reduced DeFi costs. Meanwhile, gold has slipped to $3,355.13 as upbeat risk sentiment and policy shifts weigh on safe-haven demand. In the broader market, Japan’s Nikkei 225 hit a record high amid renewed U.S.-China trade truce, while U.S. stocks eased as investors await fresh inflation data.
The crypto market, always teetering between fear and greed, faces an uncertain path forward. With variables like thin liquidity, leveraged derivatives, and macroeconomic signals swirling, Bitcoin’s recent bounce raises as many questions as it does hopes. Can optimism hold, or are we bracing for another round of volatility? As ever, the coming days promise to be anything but dull.
Source
This article is based on: Asia Morning Briefing: Bitcoin’s Thin-Liquidity Bounce Raises Questions on Staying Power
Further Reading
Deepen your understanding with these related articles:
- Bitcoin Regains Perch Above $115,000 as Crypto Markets Rebound
- Bitcoin Net Taker Volume Stays Bearish – Fragile Market Structure Risks Liquidation Cascade
- Bitcoin Price Crash To $100,000 Or Rally To $122,000? Analyst Shows Game Plan For BTC
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
