Bitcoin BTC/USD is down 14% over the past seven days, prompting experts to debate about the role receding liquidity is playing in this correction.
What Happened: In a detailed thread on X on Thursday, UnlimitedFnds Chief Investment Officer Bob Elliott pointed out that the post-election crypto rally is fading, with many assets completing full round trips from their highs.
Bitcoin has dropped 20% from its post-election peak, mirroring weakness across crypto markets.
Ethereum ETH/USD and Solana SOL/USD have erased their post-election gains, signaling broader market-wide risk aversion.
Crypto-related equities, including Strategy MSTR, have fully reversed their recent gains.
Even speculative assets are struggling—meme coin Fartcoin FARTCOIN/USD lost momentum, while Trump-themed cryptocurrencies have cooled off from their highs.
Also Read: Bitcoin Will Still Hit $500,000 Before Trump Leaves Office, Standard Chartered Analyst Maintains
Why It Matters: Elliott sees crypto's downturn as an early warning sign of broader liquidity withdrawal.
Historically, crypto benefits first from excess liquidity, making it a leading indicator for risk assets.
The current downturn suggests liquidity conditions are tightening ahead of 2025, potentially leading to broader financial strain.
If liquidity continues to tighten, stock markets—currently near all-time highs—could face increased downside risk as easy money disappears.
What's Next: CryptoQuant CEO Ki Young Ju noted high spot volume at $100,000, but Bitcoin now faces a liquidity test. Without fresh inflows, BTC could consolidate in the $75,000-$100,000 range until a major catalyst spark renewed demand.
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