Bitcoin has experienced a significant price correction following its recent all-time high in July, shedding nearly $9,000 in value. The downturn, characterized by unusual market instability, is attributed primarily to a collapse in liquidity inventory and persistently weak demand.
The descent marks a stark reversal from Bitcoin’s peak close to $123,091 just last month. Analysis indicates this movement was fueled by liquidity metrics reaching historic lows, a factor that disrupted fundamental supply-demand dynamics typically seen in the market.
Compounding the volatility was unstable inflow activity within Bitcoin Exchange-Traded Funds (ETFs), contributing to the uncertain environment. Despite the overall weakness, institutional-level purchases resurfaced, with firms like Metaplanet acquiring 462 BTC.
Recent market data presents a contradiction: while trading volume saw an increase of over 13%, exceeding $55 billion, the token’s price registered a minor 0.22% decline. The overwhelmingly dominant factor underscoring the instability is the extraordinary collapse in the liquidity inventory ratio to unprecedented lows, overpowering the price-supportive effect of low absolute supply.