[Analysis] "Bitcoin volatility widens…market liquidity nears year-end lows"

Singapore-based crypto trading firm QCP Capital analyzed that the Bitcoin (BTC) and Ethereum (ETH) markets are experiencing a sharp decline in liquidity ahead of year-end.

On the 8th, QCP Capital said in its report, "Bitcoin showed a whipsaw between 88,000~92,000 dollars last Sunday, and Ethereum also surged from 2,910 dollars to 3,150 dollars," adding, "with liquidity thinning the market is reacting sensitively even to small orders." It explained, however, that "despite sharp price movements, liquidation sizes were limited." Perpetual futures open interest for Bitcoin and Ethereum was reported to have decreased by 40~50% from the October peak.

Although it appears quiet on the surface, analysis also suggested that exchange Bitcoin outflows are reducing supply. About 25,000 BTC were withdrawn from exchanges over the past two weeks, causing ETF and corporate holdings to surpass exchange holdings for the first time. ETH exchange reserves have also fallen to their lowest level in 10 years, meaning cumulative buying flows have continued even as retail investor interest has waned.

QCP Capital predicted that the U.S. Federal Open Market Committee (FOMC) meeting scheduled for this week will be a key variable for market direction. The report said, "A 0.25%-point rate cut is expected at this FOMC, but future balance sheet operation guidelines will determine risky asset prices," adding, "With Bitcoin remaining in an 84,000~100,000 dollar range and liquidity thinning, a clear breakout in either direction could decide the year-end trend."