In the ever-volatile world of cryptocurrency trading, liquidity concerns have taken center stage, as highlighted in a recent analysis by crypto expert Gracy Chen from Bitget. Her insights, shared on November 17, 2025, delve into the multifaceted reasons behind Bitcoin's (BTC) recent downturn, emphasizing how shallow market depths and macroeconomic tightness are amplifying price swings. This narrative underscores a critical trading lesson: in low-liquidity environments, even minor sell-offs can trigger outsized reactions, making BTC vulnerable to rapid corrections without substantial volume backing.

Understanding Micro-Level Liquidity Challenges in BTC Trading

At the microstructural level, Gracy Chen points out that market makers (MMs) have significantly reduced their risk exposure following key events around October 11. This has led to thinner order books, where small sell orders can punch through multiple price levels, causing swift price drops. For traders, this manifests in BTC's chart as passive breakdowns below critical technical thresholds. Notably, BTC has broken below both its 200-day and 360-day moving averages for the first time in this cycle, with the Relative Strength Index (RSI) dipping to around 33, signaling near-oversold conditions but lacking reversal cues. These movements aren't driven by fundamental shifts but by liquidity vacuums, where low depth allows prices to cascade lower without massive selling pressure. Trading volumes remain subdued, yet price volatility spikes, creating opportunities for scalpers who can capitalize on these jumps, but also risks for those caught in sudden wicks. Savvy traders should monitor order book depths on exchanges like Binance or Bitget, watching for signs of MM replenishment that could stabilize BTC around $90,000 to $95,000 support zones.

Macroeconomic Pressures Shaping BTC's Trajectory

Shifting to the macro picture, BTC's performance is increasingly tied to U.S. internal liquidity dynamics rather than global narratives or retail hype. According to Chen's observations, the Federal Reserve's ongoing quantitative tightening (QT) keeps system liquidity growth low, while elevated U.S. Treasury yields draw capital toward safer assets, squeezing high-beta plays like cryptocurrencies. Additional headwinds include potential government shutdowns blocking Treasury General Account (TGA) fund releases and fading expectations for December rate cuts, which erode risk budgets. This environment explains BTC's persistent overhead resistance; it's not a lack of compelling stories but insufficient dollar liquidity fueling the stall. For crypto traders eyeing cross-market correlations, this ties into stock market trends, where AI-driven sectors like semiconductors are attracting flows, as seen in Korea's KOSPI surging over 70% this year. Institutional investors, via spot BTC ETFs, have shown net outflows peaking at $800M to $900M daily, a clear barometer of waning risk appetite. This institutional caution suggests BTC may consolidate until U.S. quantitative easing (QE) resumes, potentially triggered by debt pressures or fiscal needs under incoming administrations. Traders should watch for QE signals, as they could ignite the next bull leg, pushing BTC toward $102,000 to $103,000 resistance—aligned with the 360-day moving average.

From a funds flow perspective, global liquidity constraints are forcing capital to chase the strongest betas. In Korea, a key risk sentiment indicator, Upbit's trading volumes have plummeted 80% year-over-year, with retail interest pivoting from altcoins to AI and semiconductor stocks. This migration highlights crypto's current backseat to AI narratives, yet it doesn't spell abandonment—rather, a pause awaiting liquidity expansion. For stock-crypto correlations, this implies opportunities in AI-related tokens like FET or RNDR, which could benefit from spillover if semiconductor rallies continue. On-chain metrics reinforce this: BTC's transaction volumes are lackluster, with no panic selling evident, pointing to a liquidity-driven correction rather than capitulation. Traders can use this to position for mean-reversion plays, targeting entries near oversold RSI levels while managing leverage tightly to avoid amplified swings.

Technical Analysis and Trading Strategies Amid Liquidity Crunch

Technically, BTC's chart reveals a deep callback with breached moving averages and subdued volumes, characteristic of unbacked declines. Chen advises that a reclaim of $102,000 to $103,000 would signal a potential reversal, but until QE clarity emerges, technicals remain secondary. For practical trading, this means prioritizing position sizing and de-leveraging over directional bets. In a shallow liquidity pool, as Chen aptly describes it—a market where 'a slight breeze can whip up giant waves'—strategies like range trading within $85,000 to $95,000 could yield profits, while monitoring ETF flows for institutional re-entry cues. Broader implications for stock markets include reduced correlations with tech-heavy indices like the Nasdaq, as crypto waits for its liquidity catalyst. Ultimately, this analysis equips traders with a roadmap: control risks now, and prepare for QE-driven surges that could propel BTC to new highs, blending micro tactics with macro vigilance for optimal outcomes.