Bitcoin’s longest weekly decline in more than a year is exposing a broader structural liquidity problem that now extends far beyond leveraged traders, according to a report by Bitfinex on Monday.
The exchange argues that the recent four-week, 30% slide, the steepest since the FTX collapse, reflects a market entering a new, more fragile liquidity regime heading into 2026.
Bitfinex attributes the downturn to a combination of record liquidation events, collapsing order book depth, and a macro environment where liquidity is tightening across asset classes.
More than $19 billion in leveraged positions were wiped out during the Oct. 10 cascade, followed by another $3.9 billion last week, signals, they say, of a deleveraging cycle that has not yet reset.
Short-term holder pain has intensified sharply. Realised losses now exceed $523 million per day, levels last seen during the 2022 capitulation.
At the same time, order book liquidity across major venues has fallen roughly 30% since October, leaving the market hypersensitive to relatively small flows.
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Bitfinex also notes that Bitcoin once again peaked ahead of equities, a pattern observed in previous cycle tops, suggesting that crypto may be a leading indicator of broader risk-asset weakness.
With rate-cut expectations fading and sovereign yields elevated, liquidity remains constrained.
Even sovereign buying is not offsetting the fragility. El Salvador’s purchase of 1,090 BTC, its largest ever, removes supply from circulation but does nothing to support short-term depth.
As more long-term capital locks coins away, tradable float continues shrinking, amplifying volatility.
A new regulatory overhang is emerging as well with the White House proposal for coordinated global reporting of foreign-held crypto. Bitfinex says this could affect offshore liquidity and institutional flow patterns.
The report states that Bitcoin is transitioning into a structurally thinner market where price swings may be sharper, even as long-term adoption strengthens.
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