The reason behind the failure of Bitcoin bulls to shift the $42K BTC price range

A recent investigation reveals that BTC price volatility currently lacks catalysts, and Bitcoin finds itself stuck in a liquidity situation. This week, Bitcoin remains below $43,000 as institutional purchases do not significantly influence market movements.

Bitcoin bulls remain constrained by liquidity.

For the sixth consecutive day, data from TradingView and Cointelegraph Markets Pro confirm that Bitcoin’s price activity remains concentrated in a small range.

Bitcoin has failed to impress traders since it fell 15% in two days last week following the introduction of the first spot exchange-traded funds (ETFs) in the US.

Bulls also lack the momentum to take BTC/USD back to even the upper end of its wider trading range, with $48,000 serving as the ceiling, even though they haven’t so far produced any more losses.

Upon analyzing the obstacles that stand in the way, trading resource Material Indicators identified a critical issue: excessive liquidity surrounding the spot price. 

On January 18, it repeated a well-known phrase and informed users on X (previously Twitter) that “liquidity dampens volatility.”

“That is precisely why BITCOIN has been trading sideways with price pinned between $41.5k – $44k since Saturday.”

A heatmap of the BTC/USDT order book liquidity on Binance, the biggest exchange globally, was provided by Material Indicators. It displayed a haze of bid support between $42,000 and a spot at about $42,500.

It went on, “We can see that another $10M+ in BTC bids has moved above $42k on the weekly view of the Binance order book, but the resistance above $43.5k has been strengthening.”

The heatmap also indicated that there has been substantial seller interest at $45,000 since Bitcoin dropped below $44,000.According to Material Indicators, there were no obvious candidates who might change the market shortly.

Analyst: “No wonder” BTC price came off highs

 Meanwhile, several alternative explanations for why Bitcoin is not responding to the ETF debut with sharp increases keep coming to light.

The author of the statistics resource Look Into Bitcoin, Philip Swift, noted a classic signal on its Value Days Destroyed (VDD) Multiple measures in his own X post that day.

According to Swift, VDD, which compares spending velocity over time by multiplying the current Coin Days Destroyed metric by the price of Bitcoin, usually indicates a local top when it crosses 1.5.

With a print of the indicator beside him, he wrote, “Value Days Destroyed Multiple reached frothy levels for this early stage of the cycle.”

“No surprise that bitcoin price needed to cool down.”