Liquidity First Breakout Later

GM Anon!

It looks like the bull phase is postponed rather than cancelled. BTC defended $98K–$100K more than once, which tells us there is real spot demand, but the market hasn’t reclaimed the levels that would confirm a full repair. Liquidity frictions from the shutdown/TGA setup, plus ongoing ETF outflows, are still in the way. For now this is a market stabilising below resistance, not breaking out. Let’s unpack what tightened conditions, what has improved, and what still needs to turn.

TLDR

• BTC defended $98K–1$00K but is still below $105K–$110K repair zone.

• Drop was liquidity-driven (TGA high, shutdown, month-end, bill issuance).

• Liquidity frictions can repeat until QT stops and TGA is drawn down.

• ETFs still seeing outflows.

• On-chain looks like late-stage selloff: ~30% BTC at loss, big wallets bought ~30K BTC.

• STRK led inflows; ARB, edgeX, WORLD, BASE followed; ETH, HYPE, BNB Chain saw outflows.

• ETH stablecoin volume hit ~$2.82T in October, stables still the main rail.

• DEX volume jumped to ~$613.3B, on-chain share rose toward 20%.

• Liquidity base is large but not growing fast, so rallies fade.

Market Update

Today will zone in on the state of the market, because the last leg lower in BTC was not the result of a single bearish crypto event but of several liquidity frictions hitting at once, and price is still trading below the levels that would confirm a turn.

BTC is currently stabilising around $103K. That comes after price was pushed below $100K on two separate occasions and bought back both times. The market has therefore identified $98K–$100K as the first area where real spot demand is willing to act. That is an important observation, because the break under six figures was not ignored. It was defended. Even so, the recovery has stopped well before any of the important trend references.

On the daily view BTC remains below all of its key moving levels. The 9 EMA sits around $105K. The 21 EMA is clustered near $107.8K. The 200-day moving average is up near $110K, and the 50-day is higher again, close to $112K. Momentum has started to flatten, with RSI lifting off the high 30s and MACD easing from its lows, but there has not been an actual momentum reversal. In market language, this is early stabilisation beneath trend, not the start of a new leg higher.

The reason for the sharp break is best explained by the liquidity sequence that macro expert Tomas outlined. The Treasury General Account moved well above its target level. That happened because the government shutdown reduced federal spending while tax and tariff receipts continued. Funds that end up in the TGA do not circulate through the banking system. They sit at the Federal Reserve. That is a direct drain on reserves.

At the same time, the Treasury was issuing a meaningful amount of short-dated bills. The proceeds from those auctions also landed in the TGA. So there was less government spending than usual and more cash than usual being parked at the Fed. Then month end arrived. 

Banks did the typical window dressing, moving cash into Fed facilities to improve regulatory snapshots. On top of those flows, one or more banks accessed the Fed’s Standing Repo Facility for around $50B, which is exactly what appears when reserves are tight for a day. None of these items is large enough on its own to cause a breakdown in BTC. But when all of them arrive in the same week, the result is a short period of scarce dollars.

BTC was already leaning on the $109K–$110K shelf at that point. ETF flows had been negative for six days. On-chain activity from smaller holders had slowed. In that situation the market chose the path of least resistance. It ran the level, flushed under $100K, and went to see where the real bid was. It found that bid in the $98K–$100K pocket. Also take note that ETF flows continue to remain negative.

The end of the government shutdown matters here. Once spending resumes, the TGA can begin to move lower toward its intended level. When the TGA falls, those balances leave the Fed and go back into the system, easing the reserve pressure that helped push BTC through support.

That sits alongside the Federal Reserve’s announced plan to stop quantitative tightening in December, which will remove an ongoing source of downward pressure on reserves. Taken together, the factors that created the short, sharp tightness are already in the process of fading.

On-chain and flow data are consistent with a late-stage selloff rather than the start of a new trend lower. Roughly 30% of BTC supply is now held at a loss, which is the highest reading since 2024. Sentiment measures such as the fear and greed index are in extreme fear. CryptoQuant’s bull score even printed 0, a level normally associated with capitulation phases. Long-term holders sold more than 400K BTC over the past month, which is meaningful distribution, but that supply did not fall into a vacuum.

Meanwhile, large wallets accumulated about 30K BTC this week, around $3B in nominal terms, That is the exact pattern that often appears near lows: older coins come out, stronger balance sheets and passive products take the other side.

Even with those positives, the forward structure is still very clear. The $98K–$100K area is now the defended floor. As long as that band holds on retests, the market can keep building a base. The next step upward is $105K–$108K, where the short-term moving averages are clustered. That zone is where the market will show whether this is just a reaction off support or the start of actual repair. The genuine confirmation level remains $109K–$110K, where the 200-day sits and where the initial break happened. Only above that band can the decline be called fully repaired. Everything below it is still consolidation after a liquidity shock.

Tomas noted that if the TGA stays elevated, the same kind of funding tightness can show up again at end-November and again at quarter end, because banks will do month-end window dressing and Treasury issuance is still heavy. With the shutdown still ongoing, government spending is not flowing out at the normal pace, so balances keep piling in the TGA instead of in the banking system. That keeps reserves tighter than they should be and leaves BTC exposed to short, sudden liquidity squeezes until two things happen: the Fed actually halts QT in December and the TGA is drawn back down.

This sits alongside Ray Dalio’s point. The Fed is presenting the stop to balance-sheet runoff as a technical step, but if it happens while policy rates are coming down, deficits are still large and asset prices are still high, it behaves like easing into strength. In that setup, liquidity tends to move into financial assets first, which is a constructive backdrop for BTC once the chart is repaired.

What is missing right now is support from ETFs. If spot products are still posting outflows, then the handover from weak holders to strong holders is not complete and spot has to do more of the work. That makes the technical levels even more important.

So the current picture is:

• BTC defended $98K–$100K more than once

• Liquidity frictions from the shutdown and high TGA balances are still present

• ETFs are not yet providing consistent buy-side support
  Confirmation still starts above $105K–$108K and is only complete once BTC is back over $109K–$110K

Until those conditions are met, this remains a market stabilising below resistance after a liquidity-driven break.

Market Data Points

Flows this week have been lopsided. Over the last 7 days, Starknet actually led with the largest net inflows, which is a bit unexpected given how crowded the L2 field is right now. It was followed by Arbitrum, edgeX, WorldChain and Base. On the other side, Ethereum saw the heaviest net outflows, with additional noticeable red on Hyperliquid and BNB Chain.

Ethereum just had its biggest month ever for stablecoin activity. Onchain volume in October jumped to about $2.82T, a 45% rise from September’s high, as traders parked in stables to farm yield and stay liquid while the broader market cooled. USDC was the main rail (~$1.62T), with USDT close behind (~$896B), showing that most flow is still happening in the two majors. It’s a sign that even in a pullback, stablecoins are the infrastructure everyone touches.

Decentralized exchanges saw a major pickup in activity in October, with trading volume rising to about $613.3B from roughly $500B in September as traders repositioned during the market selloff. Uniswap was the busiest venue at around $170.9B, followed by PancakeSwap at about $101.9B, showing broad on-chain participation across ecosystems. Centralized exchanges were active too, with volume reaching roughly $2.17T, but DEXs still managed to lift their share to nearly 20%, signaling that more flow is migrating on-chain when volatility hits.

As pointed out by Wintermute in a recent post, crypto’s liquidity base is large but no longer accelerating. Stablecoins, ETFs and DATs have expanded from about $180B to roughly $560B since early 2024, but the latest increments are clearly smaller. That signals we’re in an internal-rotation phase rather than a fresh-inflow phase, which is why rallies fade quickly, leadership keeps narrowing, and it’s getting harder for the market to push higher without a new wave of capital.

Majors & Memes

Majors stayed under pressure this week, extending the correction that began in late October. BTC fell roughly 7% to hover near $102K, retracing most of its early-month gains as traders shifted to the sidelines amid cautious sentiment. ETH lagged further, down more than 11%, reflecting softer appetite for risk and lighter liquidity across DeFi-linked assets. BNB, XRP, and SOL each shed roughly 8–14%, with SOL seeing the steepest losses as capital rotated away from high-beta L1s. 

In contrast, select mid-caps and infra plays broke higher. ICP and FIL were the clear standouts, up over 100% on the week as traders chased decentralized compute/storage narratives. NEAR, ZK and AR followed with strong double-digit gains, helped by rotation into AI and L2-related sectors.

The outlier on the large-cap side was ZEC, which has been building momentum for several weeks — now up 30% on the week and over 200% on the month. The move reflects renewed attention to privacy coins and on-chain anonymity, with ZEC reclaiming a spot among the top performers despite broad market softness. On the weaker side, TAO led declines, down more than 25% after a volatile run-up, while ZEN, HUM, and AXY also posted >20% losses. 

Overall tone is still corrective: traders are trimming risk, rotating defensively, and waiting for a clean catalyst to tell them whether this leg lower is done.

Smart Money Accumulation

Smart money flows in the SOL ecosystem this week were concentrated in a handful of names. BELIEVE saw the strongest accumulation: wallet balances increased by roughly 330% and total holdings moved to just under $786K, making it the highest-conviction add in the set. PAYAI (+247%) and UMBRA (~60%) also recorded sharp increases in balances from a smaller base, which tells us new wallets were willing to size into newer exposure rather than only scaling existing bags. Tokabu, URANUS, and STARTUP showed moderate growth (single- to mid-teens %), consistent with maintaining them as active positions but not prioritising them for size this week.

On the trimming side, reductions were controlled. SPARK was cut the most (about -21% of balances), while DUPE and KLED were reduced slightly even though KLED still holds one of the larger dollar allocations (~$1.8M).

Smart money positioning on EVM names this week was mostly static, with only a couple of lines showing meaningful adjustment. That usually signals a hold-and-monitor stance rather than active risk deployment.

CULT, BITCOIN, PEPE, SHRUB, and TRWA all sat at 0% 7D change, keeping existing allocations in place. That’s notable for TRWA in particular, since it remains one of the larger dollar balances (~$910K) and was left untouched, suggesting it’s still a core hold. SPX also barely moved (basically flat) while staying near $572K.

The only clear add was OVPP, which saw the largest increase on the page (+165.6%) to about $303K — effectively the one name smart money was willing to size up on EVM this week. AP was lifted slightly (+1.5%), more of a tidy-up than a fresh push.

Reductions were selective: APU was trimmed about -4%, and Mog was cut harder at around -32%, indicating de-emphasis on that line. Overall, the pattern is low-velocity: existing positions were maintained, one emerging name (OVPP) was funded, and weaker lines were shaved, consistent with a cautious EVM tape.

That wraps up this post—we hope you found the insights valuable. See you next week, anon! 🚀