Liquid BTC with abundant liquidity reacts slowly; what is the market waiting for?

Bitcoin’s performance has been disappointing. Despite the global money supply continuing to expand and reaching new highs, BTC has failed to rise accordingly. According to the latest data, Bitcoin is currently priced at $91.03K, still quite a distance from its all-time high of $126.08K, with a decline of nearly 30%. The M2 indicators in the US, China, Japan, and the Eurozone have all risen to new highs, which in the past typically signaled a strong upward cycle for risk assets, but this time there has been a noticeable deviation.

Traders have adopted a cautious approach, and the market lacks the kind of blind optimism often seen. The underlying reasons are worth exploring.

Funds are on the sidelines, liquidity has not yet shifted to risk assets

The current liquidity environment appears ample, but funds have not flowed into speculative sectors as expected. This reflects lingering doubts among market participants about the economic outlook—uncertainty and the severity of the financial environment continue to suppress risk appetite.

In simple terms, liquidity has increased but remains in a wait-and-see phase. Once funds decide to shift toward high-risk assets, Bitcoin is bound to enter a new upward cycle. The question is—when will this turning point arrive?

Technical signals indicate a bottom

The Energy Value Oscillator provides an interesting reference. This indicator tracks the hash power and energy injected into the mining network, which has now fallen to lows within a ten-year cycle.

Historical experience shows that when the indicator reaches deep lows, it often signals the formation of a long-term bottom rather than a market top. A notable feature of this cycle is that prices have never entered the overheated “red zone” seen during past bull market peaks. This suggests that the market has not experienced extreme speculation but is in a relatively rational accumulation phase.

This aligns with other signals we observe—liquidity is abundant but not mobilized, the business cycle remains weak, and risk assets have not fully activated. The market is accumulating energy, waiting for the moment to explode.

Derivatives market reveals trader sentiment

Bitcoin’s total open interest has fallen to about $27.3 billion, with traders generally reducing leverage exposure and not rushing into the futures market for aggressive trading.

Meanwhile, funding rates remain slightly positive, reflecting a balance between long and short positions, with no extreme skew. What does this phenomenon indicate?

Leverage funds are gradually being drained from the market. Speculators are temporarily on the sidelines, waiting for clearer signals before rebalancing their positions. This “deleveraging” reset process usually occurs on the eve of a major breakout—markets need to clear unnecessary risks to make room for subsequent large volatility.

Conclusion: The timing is not yet right, but preparations are underway

The current situation can be summarized as follows:

• Liquidity conditions are in place: Global money supply is ample, providing a foundation for upward movement
• Market sentiment remains cautious: Traders are still observing, without forming excessive optimism
• Technical readiness is sufficient: Energy indicators are at lows, leverage has been cleared, and open interest at $27.3 billion remains at rational levels

Bitcoin is currently in a buildup phase. When investor risk appetite is finally activated, and liquidity shifts toward high-risk assets, Bitcoin still has ample room to absorb capital and is unlikely to quickly overheat.

This cautious stance is likely the best prelude to the next rally.