Bitcoin’s Rebound to $64K a ‘Liquidity Illusion’ as Trading Volume Falls

Bitcoin (CRYPTO: $BTC) has climbed above $64,000, but the rebound is taking place in thin trading conditions, raising questions about whether the rally has enough momentum to last.

In a recent post on X, crypto analyst 10x Research said crypto trading activity has fallen sharply from the peaks seen after the inauguration and during the October flash crash. Bitcoin is now trading within one of its narrowest ranges in months, while implied volatility has dropped to levels rarely seen outside the summer lull.

"Options flow tells a story of shifting conviction, and traders have pivoted," the expert wrote, adding that implied volatility has fallen to levels usually reserved for the summer lull, ETF inflows remain weak, stablecoins keep off-ramping, and Strategy (NASDAQ: $MSTR) has been a net seller for the past month.

Onchain analytics platform CryptoQuant also revealed that funding rates across several major exchanges have moved toward negative territory. Binance, Bybit, OKX and Deribit have all recorded weaker funding conditions, suggesting short positions have become more prominent.

The recent bounce appears to have been helped by this imbalance. Bitcoin found support around the $62,700 monthly open before moving higher. As short positions accumulated, the market became vulnerable to a squeeze, allowing prices to rise quickly even without strong spot-market participation.