Bitcoin Hops Between 'Liquidity Pockets' as Market Approaches Year-End Vacuum

At this point, the average cost basis of a Bitcoin-linked exchange-traded product (ETF) aligns with the largest BTC onchain cost basis last acquired. Investors don't seem to be willing to let the price drop further.

However, macro conditions remain a headwind. The latest US Federal Reserve rate cut was not accompanied by any particularly 'dovish' guidance, pushing back expectations for further easing in the short term as policymakers emphasized a wait-and-see, data-dependent approach. At the same time, renewed Bank of Japan (BoJ) tightening has reintroduced pressure on global funding conditions, draining one of the key pillars of global liquidity and unsettling risk sentiment across markets. Adding to the pressure, investors remained spooked by the health of equities related to heavily AI-driven companies – specifically the profitability of long-duration AI capital expenditure.

Skepticism over the value of companies such as CoreWeave and Oracle has spilled into the digital assets market, highlighting the correlation between stocks and crypto as risk asset classes. With macro uncertainty elevated, the price of Bitcoin increasingly appears to be a function of well-defined 'liquidity pockets', with the market oscillating between $84k and $94k. A decisive break above this range would reignite upside momentum and reopen a path toward $100k, so the theory goes, while a loss of support would likely accelerate downside pressure toward $80k area. For better or worse, traders are glued together by a sense of remaining in the 'pocket'.

Liquidity pockets as market magnets 

From the beginning of the week, aggregated order book liquidity from Coinglass data highlights a clear deterioration in derivatives market structure despite BTC trading higher. Futures order books flipped decisively negative, with the aggregated delta moving from $105mn to –$254mn. Bid liquidity depth – also known as downside support – fell from $395mn to $269mn while ask liquidity – frequently called overhead supply – surged from $290mn to $524mn. This reflects increasingly defensive positioning in perpetuals, with participants selling into strength and reinforcing heavy selling orders above current price. 

In contrast, spot markets remained supportive, with aggregated bid liquidity rising from $81mn to $98mn, and spot delta staying firmly positive, reaching the highest positive print since the 1 Dec drawdown to $86k. This divergence explains the current range-bound price action. 

With futures order books capping upside below last week open at $90.4k, short-term price movements are increasingly dictated by where leveraged positions concentrate, turning liquidation zones into key magnets for short-term direction. 

Liquidation risks: where liquidity pulls price 

Areas of concentrated liquidity play a central role in short-term price formation. Magnet zones emerge where liquidation risk clusters within a narrow price band, naturally drawing price toward them as positioning is tested and stops are triggered. These zones often act as convergence points, helping explain directional moves even in the absence of fresh information. 

Once reached, the same areas can also function as support or resistance. High liquidity allows larger participants to execute size efficiently; once those orders are filled or unwound, price frequently reverses as the marginal flow disappears. 

(Source: CoinGlass) 

Liquidity remains heavily concentrated around last week’s open near $90.4k, where multiple layers of resistance have formed. A large cluster, roughly $273.2mn in leveraged liquidations between $90k and $90.8k, aligned with visible spot and futures supply, drawing price into the zone but ultimately capping upside.  

This dynamic is further confirmed by the presence of a large, multi-day $57m sell wall at $90.5k in perpetual futures. BTC briefly tested this level on Wednesday afternoon, and buying pressure proved insufficient to absorb this sell-side liquidity, resulting in a swift rejection and reinforcing the area as near-term resistance rather than a breakout point. While the move triggered a minor short squeeze, with approximately $360mn in leveraged positions liquidated between $88.0k and $90.4k, futures supply quickly reasserted control, pushing price back lower and keeping the broader range close to intact.  

On the downside, a strong liquidity wall continues to defend the $85.2k area, where price bounced cleanly following Wednesday's decline, reaffirming the level as a key confluence zone for market participants. This area concentrates multiple sources of demand – spot buying interest, cost-basis support, and prior volume accumulation – making it a level that both discretionary and systematic traders are incentivized to defend. As long as this zone holds, downside moves are likely to be absorbed rather than extended, reinforcing the broader range structure. A failure to hold it, however, would signal a meaningful shift in market balance and open the door to a deeper move lower.  

The year-end liquidity vacuum

Close to the end of the year, the market typically slips into a liquidity vacuum: market makers quote smaller size, books thin out, and relatively modest flows can move price disproportionately. The drop in activity that normally occurs at the weekend or during a public holiday may be replicated as people in most large economies focus on other matters.

With fewer orders resting near spot, the same burst of selling can translate into larger wicks and faster liquidations, which is why thin windows (weekends/holidays) often feel more violent even without a change in narrative, as volume drops, liquidity drops, and execution hits “emptier” books.