Bitcoin Bear Market Late-Stage Signal Emerges: Volatility and Liquidity Compressed to Multi-Year Lows, Macro Landscape Already Showing Signs of Warming Up

BlockBeats News, August 17, Bitfinex released its latest market report, with Bitcoin continuing to trade within a narrow range. Volatility, trading activity, and liquidity have compressed to levels consistent with the late bear market. The current price of BTC is close to the median realized price of $63,200, with $67,176 remaining a key resistance for short-term holders to regain profitability. Demand has significantly weakened: the U.S. Bitcoin spot ETF saw a net outflow of approximately $385 million last week, corporate treasury activity has turned negative, spot trading volume has dropped to multi-year lows, and Bitcoin transaction speeds have hit a seven-year low. In such a thin market, even a small change in fund flows could trigger a sharp move in either direction.

The macro backdrop is becoming more favorable. In July, both CPI and PPI softened, reducing expectations for further Fed rate hikes. Short-term U.S. bond yields have fallen, and the S&P 500 has hit a historical high. However, the details are not as mild as the overall data suggests; the easing of inflation is mainly due to the drop in energy prices, while service prices remain firm, and the rising costs of computing power and AI infrastructure are causing a new type of supply-driven inflation.

The key difference lies in the fact that the loose monetary environment has boosted traditional risk assets but has not had an equivalent effect on crypto assets. Stablecoin supply has fallen from its peak in May, with net outflows from spot ETFs occurring in the same week that the stock market hit a new high. This indicates that the market is pricing in future liquidity, while crypto still relies on funds that have not yet truly moved on-chain. The core issue is shifting from whether monetary conditions are improving to whether the improvements can result in actual inflows into crypto.

If spot ETFs see sustained inflows again and stablecoin supply resumes expansion, re-establishing the transmission mechanism, it could serve as a catalyst for Bitcoin to break out of its long-term low volatility. Before this happens, although the macro environment is increasingly constructive, this round of crypto rebound still lacks support. With current very low participation and BTC holding crucial support at the realized price, once liquidity returns, it could trigger a sharp increase in volatility, tilting the market structure towards an upward breakout.