Amid Liquidity Drought, Will Bitcoin Trade Sideways Until Summer 2026?

▲ Bitcoin (BTC)

Bitcoin (BTC) may remain trapped in a sideways range until the summer of 2026, as tightening market liquidity and weakening investor sentiment persist even if the cryptocurrency continues its short-term rebound, analysts warn.

According to Investing.com on Feb. 12, Ray Youssef, CEO of cryptocurrency app NoOnes, said the market has entered a prolonged phase of risk reassessment following a recent plunge of more than 45%. “While the exact bottom remains uncertain, the likelihood of a V-shaped recovery is low,” he said, adding that “it will be difficult to expect a strong trend reversal before the summer of 2026.” He noted that while a 20–30% rebound driven by a short squeeze or short covering is possible, such a rally could end up as a “bull trap” rather than the start of a sustained bull market.

Market liquidity remains in a bottleneck. According to data from Kaiko, spot trading volume on major exchanges has fallen 25–30% compared to late 2025, while open interest dropped sharply following recent liquidations. With thinner order books, even small sell orders have caused sharp price swings, pushing Bitcoin down to the $60,000 level earlier this month. During rebound phases, selling pressure from long-term holders and institutional investors has continued to limit upward momentum.

Notably, spot Bitcoin ETFs and spot Ethereum (ETH) ETFs have recorded billions of dollars in net outflows over several months. Youssef pointed out that while inflows from pension funds and large asset managers via ETFs amplified gains during the rally, institutional capital outflows magnified the downturn. Corporate holders such as Strategy, Bitmine, and Forward Industries have also entered unrealized loss territory, creating a structure in which profit-taking tends to take priority during rebounds.

The depletion of retail investor capital is also cited as a burden. The sharp decline in October 2025 was not triggered by the collapse of a specific exchange but occurred alongside a broad-based sell-off across asset classes, dealing a greater blow to market confidence. “This correction has weakened expectations that cryptocurrencies would become a ‘new financial standard,’” Youssef said, noting that the market is once again being viewed as a speculative asset. Without a recovery in retail capital, any rebound is likely to remain fragile.

Ultimately, the short-term direction hinges on U.S. monetary policy, analysts say. “The Federal Open Market Committee (FOMC) schedule in the second half of the year could serve as a catalyst for renewed optimism, but if CPI, PPI, and PCE inflation indicators rise again, the room for policy easing will shrink significantly,” he explained. Until expectations for improved liquidity recover, Bitcoin is likely to continue trading within a range rather than staging a major breakout.

Disclaimer: This article is for investment reference only and the publisher is not responsible for any investment losses incurred based on it. The content should be interpreted for informational purposes only.