Bitfinex has reported decreased liquidity in the Bitcoin market as institutional trading participation wanes during the summer vacation season.
According to Bitfinex analysts, fewer institutional participants actively trading has led to heightened sell pressure and decreased market liquidity. “Bitcoin sell pressure has been exacerbated by fund managers being away on vacation for the summer, making the market very illiquid,” the analysts informed The Block.
The analysts further noted that data indicates ongoing profit-taking among long-term Bitcoin holders. “Even those who have held bitcoin for 3-4 years are continuing to remain risk-off and exiting spot positions, possibly due to factors such as supply overhang from German law enforcement actions, Mt. Gox sales, or a general lack of confidence in market strength,” they added.
Ryan Lee, chief analyst at Bitget, highlighted additional factors contributing to Bitcoin’s recent underperformance. Lee pointed to the German government’s transfer of seized bitcoins to various exchanges and Mt. Gox’s bitcoin cold wallet transfers to platforms like Bitbank, which have heightened expectations of selling pressure in the market.
Lee also mentioned that current Bitcoin price levels have fallen below the shutdown threshold for some mining rigs, potentially altering the buying and selling behavior of miners. “Miners are now more inclined to hold their bitcoin rather than sell it, thereby reducing potential selling pressure from this sector,” he explained.
