Bitcoin (BTC) order books are indicating a potential bottom in the market, with a bullish reversal on the horizon, according to data from Hyblock Capital. The order books, which reflect buy and sell activity at various price levels, show a significant decline in liquidity, a common pattern observed at market turning points.
Market Depth Decline
Liquidity both close to and further from the current BTC market price has dried up, suggesting the end of Bitcoin’s recent decline from its late-August highs above $65,000. Market depth, which measures the ability of the market to handle large buy and sell orders without causing significant price fluctuations, has dropped notably over the weekend.
“Low liquidity in the order book often coincides with market bottoms,” said Shubh Verma, co-founder and CEO of Hyblock Capital. Verma highlighted that reduced order book activity in the 0%-1% and 1%-5% ranges from the mid-market price could indicate an imminent price reversal and the start of a bullish trend.
Short Squeeze and Macro Developments
At press time, Bitcoin was trading at $54,800, reflecting a 4.3% increase from Friday’s low of $52,530, according to TradingView data. Despite this upward momentum, Coinglass data shows that funding rates for Bitcoin perpetual futures contracts remain negative, suggesting that many traders are holding bearish positions, or “shorts.”
If Bitcoin continues to hold strong, those bearish traders may be forced to close their short positions, potentially triggering a short squeeze that could drive prices higher.
The LondonCryptoClub newsletter suggested that the market is entering a favorable macroeconomic environment for Bitcoin. As global central banks face pressure to maintain low interest rates and balance liquidity, Bitcoin could benefit from an inflow of capital as investors seek alternative assets.
“Fiat, debt-driven economies cannot sustain high real rates. Bitcoin and broader crypto investors will be getting drunk again quite soon,” the newsletter stated, pointing to the likelihood of renewed growth in the crypto market as central banks maintain accommodative policies.
Key Takeaway for Traders
For traders, the current low liquidity in BTC’s order books may serve as an early signal of a bullish shift. Monitoring these liquidity levels can help identify key turning points in the market, offering insight into future price movements as Bitcoin approaches a potential market bottom.
