Bitcoin is on track to end the year on a negative note, a development that has amplified growing concerns among analysts who are increasingly positioning themselves for a potential bear market in the future. After failing to maintain momentum above key psychological and technical levels, market sentiment has shifted towards caution, with investors closely monitoring liquidity behavior and exchange flows for early signals of regime change.
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A recent analysis from Arab Chain, based on CryptoQuant’s Exchange Inflow Value (7-day cumulative) measure, highlights a notable difference in liquidity patterns between major exchanges. The data aggregates Bitcoin and Ethereum inflows, providing a broader picture of the risk positioning of the two largest crypto assets.
On November 24, when Bitcoin was trading around $88,438, Coinbase recorded a seven-day cumulative inflow totaling around $21.0 billion. In contrast, Binance saw lower, but still significant, inflows of almost $15.3 billion.
What is striking is that this increased inflow occurred while prices were already well below previous highs. Rather than indicating aggressive accumulation, the data indicates increased exchange rate activity consistent with portfolio rebalancing, hedging, or preparation for potential distribution.
Exchange inflows indicate a tightening of liquidity despite stable Bitcoin prices
On December 21, Bitcoin was trading around $88,635. Only marginally higher than end-November levels and still within a narrow consolidation range. While price action showed little progress, exchange rate flow data indicated a notable shift in market conditions. Updated on-chain figures indicate that liquidity flowing into major trading platforms has declined sharply in just a few weeks, underscoring a cooling in overall market activity.
Coinbase, often used as a benchmark for institutional and U.S. money flows, saw seven-day cumulative inflows fall to roughly $7.8 billion. This represents a sharp drop of more than 60% compared to the inflow levels observed at the end of November. Binance also saw a contraction, but the drop was significantly less severe, with inflows totaling around $10.3 billion over the same period. As a result, Binance surpassed Coinbase in net inflows in December, reversing previous momentum.
This difference suggests that while broad liquidity has tightened, trading activity has focused more on platforms related to shorter-term positioning and active risk management. At the same time, the lack of a significant price reaction highlights how Bitcoin has continued to trade sideways even as new capital flows slowed.
Taken together, the data points to a market functioning with lower turnover and lower urgency on both the buy and sell sides. Bitcoin’s ability to remain in range amid shrinking inflows reflects a calmer, more constrained liquidity environment compared to conditions just a month earlier.
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BTC is falling below the major moving averages as the daily trend weakens
Bitcoin is trading near the $87,900 level on the daily chart, continuing a corrective move that started after the failed breakout above $120,000 earlier this quarter. The structure now reflects a clear shift in short-term trend dynamics, with price firmly below the major daily moving averages. Notably, Bitcoin has lost the 111 and 200 day simple moving averages. Both have started to roll over and are acting as dynamic resistance rather than support.
The rejection from the $110,000-$115,000 zone marked a decisive lower high, followed by an impulsive sell-off towards the mid-$80,000 zone. Since then, price action has compressed into limited consolidation, suggesting a temporary stabilization rather than a confirmed reversal. However, the inability to regain the declining moving averages indicates that upward attempts remain vulnerable.
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The volume behavior contributes to the cautious outlook. Selling pressure increased during the initial crisis, while subsequent rebounds occurred on moderate volume, indicating limited buyer conviction. This imbalance indicates that dip buying demand is there, but not strong enough to force a trend shift.
From a technical perspective, the area between $85,000 and $88,000 has become a critical near-term support zone. A sustained grip could allow range formation. Failure to defend this level would increase the risk of a deeper retracement. To improve sentiment, Bitcoin would need to reclaim the $95,000-$100,000 region and stabilize above its key daily averages.
Featured image of ChatGPT, chart from TradingView.com