Crypto markets remain under pressure after a sharp selloff, but analysts say the more significant signal is growing fragmentation in liquidity and performance rather than outright capitulation.
Bitcoin has fallen more than 17% over the past week, dragging major tokens such as Ethereum and Solana into double-digit declines as overall market sentiment weakens.
“Funding rates are flipping negative on some venues while spiking on others due to liquidity crunches,”
Said Ashwin Khosa, chief strategy officer at Axis, describing the emergence of so-called “liquidity islands.”
Analysts say these liquidity pockets reflect capital becoming trapped across exchanges and protocols, with onchain data pointing to selective accumulation alongside rotation into stablecoins and tokenised gold.
Bitfinex analysts noted that while Bitcoin and Ethereum exchange-traded products saw heavy redemptions, Solana- and XRP-linked products attracted inflows, signalling dispersion rather than uniform risk-off behaviour.
Cross-asset signals have reinforced the dislocation, with Kraken economist Thomas Perfumo noting that gold briefly showed higher realised volatility than bitcoin, suggesting pressure is building rather than resolving.
Some market watchers say extreme volatility compression, including tight Bollinger Bands on Bitcoin’s monthly chart, indicates a decisive move for crypto markets may be approaching once liquidity conditions normalise.
At the time of reporting, Bitcoin price was $71,958.88.