Karla Barker 
Market Liquidity Shifts Without New Inflows
Bitcoin continues to trade around $103,000, struggling to build on Wednesday’s recovery from below $100,000. The CoinDesk 20 Index showed modest gains of 2% over 24 hours, with notable performances from ZEC, ICP and QNT posting 18% increases. But the broader market picture reveals something more concerning – liquidity appears to be moving between existing tokens rather than attracting new capital.
Wintermute describes this current state as a “self-funded mode” where money simply rotates from one cryptocurrency to another without fresh inflows. This pattern has been developing for months across all three primary channels for capital entering the crypto ecosystem: stablecoins, ETFs, and digital asset treasuries.
ETF Outflows and Reduced Treasury Demand
The data shows U.S.-listed spot ETFs experienced cumulative outflows exceeding $1.5 billion in less than two weeks. Meanwhile, demand from digital asset treasury firms has dropped significantly from third-quarter peaks. This contraction comes despite rising M2 money supply in major economies, which suggests the increased fiscal spending is being directed toward technology infrastructure, AI development, and domestic economic stimulation rather than crypto markets.
I think this divergence between monetary expansion and crypto inflows presents an interesting puzzle. Perhaps the fiscal stimulus is targeting different sectors entirely, leaving crypto markets to rely on existing capital.
Potential Catalysts for Recovery
The key question remains when liquidity might return. Ray Dalio’s recent comments about the Fed “easing into a bubble” and calling it inflationary could signal upcoming changes. Elevated inflation typically supports demand for gold and gold-like assets such as bitcoin. If this scenario plays out, we might see renewed interest in cryptocurrencies that serve as inflation hedges.
Traders should monitor bitcoin’s interaction with its 50-week simple moving average, which has served as crucial bull market support since early 2023. A strong rebound from this level could potentially signal new record highs.
Regulatory and Market Developments
In other developments, Coinbase has urged the U.S. Treasury to ensure upcoming rules for the GENUIS stablecoin act don’t exceed statutory requirements. Meanwhile, decentralized exchange Lighter adopted Chainlink as its oracle partner for real-world asset derivatives after experiencing a bot glitch that pushed HYPE’s price near $100.
Traditional markets also present headwinds, with the dollar index rally approaching resistance at the August high of 100.25. A breakout here could create additional pressure on crypto assets. Goldman Sachs analysis suggests the U.S. Supreme Court may rule against the Trump administration’s use of emergency powers for tariffs, though any reductions would likely affect smaller trading partners rather than major ones like China.
For now, the market appears to be in a holding pattern, waiting for clearer signals about future liquidity conditions and regulatory developments.