Analyst's View: Analysis of the Main Reasons for Bitcoin Weakening at the End of July and the Stalled Start of the Alt Season

On August 5, according to CryptoQuant analyst Arab Chain, the decline of Bitcoin at the end of July was mainly influenced by three factors: a decrease in liquidity stock ratio, significant fluctuations in ETF demand, and insufficient accumulation of smart addresses.

Specifically, the liquidity inventory ratio (the blue line in the chart) has sharply declined, resulting in the exchange's available Bitcoin reaching a historical low of only 3 months' trading volume. This state of liquidity exhaustion makes the market exceptionally fragile, where even small sell-offs can trigger severe fluctuations.

(Note: Liquidity inventory ratio = Exchange sellable volume / 30-day average trading volume, below 6 months reaches the warning level)

Secondly, the flow of ETF funds (the purple line in the chart) shows a characteristic of severe volatility, presenting an unstable state of "large inflows and large outflows." When ETF funds withdraw, the market lacks other institutional funds to take over, resulting in insufficient price support.

Thirdly, the accumulation of Bitcoin in smart addresses (the pink area in the image) is too slow. Although some large holders continue to accumulate, the buying pressure is far from sufficient to offset the market selling pressure, and they have failed to grasp key moments for concentrated buying.

At the same time, Matrixport analyst Markus Thielen stated that although the market continues to discuss an "altcoin bull market", there have only been two short-term rebounds so far, primarily focusing on a few projects, and the overall market lacks sustainability.

The analysis also added that although there is some stage-specific activity in the fourth quarter of 2024, it has not led to widespread dissemination. The rapid decline in funding rates indicates that bullish sentiment in the market has not yet been effectively gathered, and there is insufficient fundamental support; thus, the momentum for sustained increases in the future still needs to be observed.

Comprehensive analysis shows that the current Bitcoin market is under pressure due to insufficient liquidity, fluctuations in ETF demand, and a lack of accumulation, while the rebound in the altcoin market may be difficult to sustain. Bullish sentiment in the market has not yet effectively gathered, and there is insufficient fundamental support, so future upward momentum still needs to be observed.

Overall, although there is anticipation for an altcoin bull market, the overall market performance still requires more positive signals to confirm the upward trend.

#比特币价格 # liquidity crisis #alt season