Bitcoin’s sharp retracement through November is pushing the market into a structurally thin liquidity environment, creating conditions that have historically preceded high-volatility turning points, according to a Glassnode report on Monday.
The firm noted that Bitcoin has now fallen 31% from its October peak, marking its “longest continuous weekly decline across Bear and Bull Markets since the 2021–22 downturn” as multiple on-chain indicators register levels typical of stressed, late-stage drawdowns.
Market momentum has weakened sharply.
Bitcoin’s daily RSI has dropped to 18.8, one of the lowest readings in recent history, while spot market liquidity remains thin after October’s major washout.
With aggressive sellers losing steam, Glassnode identifies tentative “signs of capitulation exhaustion,” though not enough to confirm a reversal.
Investor profitability has deteriorated further.
Short-term holders now hold coins at an average loss of –22%, measured via STH-NUPL, a zone historically associated with elevated volatility and, in some cycles, bottom formation.
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This cohort’s cost basis sits near $83.7k, a level the market continues to test.
ETF flows are adding pressure. For the first time since early 2024, U.S. spot Bitcoin ETF buyers entered aggregate loss territory around $85.8k, a shift Glassnode stated may weaken these investors’ “risk-tolerance levels” in the near term.
Meanwhile, an inflow of fast-moving capital is reshaping market structure.
Glassnode reported that Hot Capital Share has risen to 37.7%, indicating a higher concentration of short-term, price-sensitive holders.
Historically, such conditions amplify market responsiveness to relatively small inflows or outflows.
Despite the stress, some stabilization signals are emerging.
Spot CVD shows moderating outflows, and exchange order flow reflects cooling sell pressure.
Still, Glassnode stressed that the market remains “exceptionally sensitive,” with liquidity thin across order books.
It added that Bitcoin is moving through a structurally fragile phase where weakened momentum, shrinking profitability and a growing short-term holder base elevate the probability of a volatile inflection, though the direction and timing remain uncertain.
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