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Bitcoin Remains Strong Despite Slower Capital Inflows – Expert Unravels Liquidity Growth

Bitcoin has reclaimed the $85,500 level after a strong move to the upside, reigniting hopes for a push toward the psychological $90,000 mark. However, despite the recent bullish momentum, uncertainty continues to weigh heavily on global financial markets. Fears of an escalating trade war and broader macroeconomic instability are keeping investors cautious, even as Bitcoin shows signs of strength.

In the midst of this volatile environment, concerns about declining market liquidity have surfaced. Recent media reports claimed that Bitcoin liquidity is sharply dropping due to slowing capital inflows. However, on-chain data from CryptoQuant suggests otherwise. The slowdown in Bitcoin’s Realized Capitalization growth — currently at +0.6% per month — reflects a reduction in new capital entering the market, not an actual decrease in liquidity.

Drawing conclusions about declining liquidity based solely on a deceleration in growth is misleading. As BTC hovers below $90,000, market participants are closely watching price action and macroeconomic signals. For now, bullish hopes remain alive — but investor caution shows no signs of fading.

Bitcoin Climbs Above $86K Amid Uncertainty

Bitcoin has experienced a quiet but notable surge, climbing above the $86,000 level as bulls attempt to kickstart a broader recovery rally. After weeks of sideways action and downward pressure, this move brings cautious optimism to investors. Still, the market remains on edge. Since late January, the crypto space has been rocked by global instability, with fears of a trade war and erratic policy signals from U.S. President Donald Trump fueling volatility across all asset classes.

Despite this upward move, selling pressure continues to linger. Investors are beginning to question whether the current cycle has more room to run or if a longer cooldown is ahead. Some analysts are now warning of a potential 6 to 12-month bear market, citing weakening momentum and heightened macroeconomic risks.

Adding to the confusion, reports have circulated about a supposed drop in Bitcoin market liquidity due to slowing capital inflows. Top analyst Axel Adler addressed this on X, clarifying that the concern is overblown. According to CryptoQuant data, Bitcoin’s Realized Capitalization continues to grow, currently up 0.6% per month and standing at roughly $866 billion.

Bitcoin Realized Cap Net Position Change | Source: Axel Adler on X

This growth indicates a slowdown in new capital entering the market, not a liquidity decline. Drawing conclusions about falling liquidity based solely on this metric is misleading. The data suggests that the market is cooling, not collapsing — a subtle but critical distinction as Bitcoin seeks to reclaim higher ground.

BTC Price Testing Crucial Supply

Bitcoin is currently trading at $88,200 after days of speculation surrounding a potential recovery rally. While the recent upward movement has injected optimism into the market, bulls still face a critical test. To confirm a new uptrend and signal the start of a fresh bull phase, Bitcoin must reclaim and hold above the $90,000 level — a key psychological and technical resistance.

BTC testing crucial supply | Source: BTCUSDT chart on TradingView

This level has acted as a strong barrier in recent weeks, and a decisive breakout could encourage more capital inflows and shift sentiment in favor of buyers. However, the risk of rejection remains high. If BTC fails to break above $90K and close convincingly above both the 200-day moving average (MA) and the 200-day exponential moving average (EMA), downside pressure could return quickly.

A failure to maintain momentum at this stage could trigger a pullback below the $84,000 level, where short-term support is expected to be tested. Market participants are watching closely as Bitcoin navigates this critical zone, with the next few days likely to determine whether the current rally evolves into a full trend reversal — or stalls under resistance. The battle between bulls and bears is far from over.

Featured image from Dall-E, chart from TradingView 



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