Engine Stalled: How The $8 Billion ‘October Shock’ Left Bitcoin’s Spot Market In A Liquidity Trap
Bitcoin is finding near-term relief after a sharp rebound toward the $70,000 level, offering temporary optimism following weeks of sustained pressure. The move has improved short-term momentum and eased immediate downside risk. However, the broader market remains characterized by indecision, as many analysts argue that this advance may represent a relief rally within a larger corrective structure rather than the start of a renewed bull phase. Price is now hovering close to the 200-week moving average, historically a critical structural support during transitional market phases. Holding this level could help stabilize sentiment and potentially define a medium-term floor. However, a sustained breakdown below it would likely increase downside risk, as it would confirm deterioration in long-term trend structure.Related Reading
Volume dynamics also warrant attention. The recent selloff occurred with elevated activity compared with preceding consolidation phases, suggesting that distribution — not merely thin liquidity — contributed to the decline. That said, volume has started to moderate as price consolidates, indicating reduced urgency among sellers.
Bitcoin appears to be transitioning into a defensive consolidation phase. Recovery above the shorter moving averages would be required to restore bullish momentum, while failure to hold current support could extend the corrective cycle further.
Featured image from ChatGPT, chart from TradingView.com
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