Market Volatility Rises as Bitcoin Breaks Support With Liquidity Compression

Source: CryptoNewsNet Original Title: Coinbase Explains Why Bitcoin Price Dumps With Whale Selling Pressure Original Link: Market Volatility Rises as Bitcoin Breaks Support With Liquidity Compression

A leading crypto exchange’s institutional division explained on social media on Dec. 2 why bitcoin’s price is dumping. The group noted that easier monetary conditions usually help risk assets, yet recent market action diverged from expectations.

The division outlined several structural pressures weighing on bitcoin. The asset slipped beneath major bull-market support bands, signaling weakening trend strength. Options activity shifted toward bearish structures. Longtime whales sold into declining liquidity. Spot bitcoin ETFs saw significant outflows, reducing consistent buy-side demand. Digital asset traders slowed participation, tightening liquidity conditions and amplifying market swings.

The firm further noted:

With quantitative tightening ending, the Fed is back in the bond market and the drain of cash from markets may be behind us. That’s usually good for risk-on assets like crypto.

The institutional team also posted an accompanying chart showing bitcoin’s cost-basis distribution across 2025. The heatmap displays concentrated pockets of holder supply between roughly $95,000 and $110,000, with darker bands indicating heavier clusters of coins bought in those ranges. As the price fell sharply in November, the chart shows bitcoin moving below dense ownership layers, suggesting many market participants are now holding unrealized losses. The visualization also reflects thinner supply zones at lower levels, which may influence volatility as price searches for areas with stronger historical demand.

The team also emphasized its tactical view, stating:

In this environment, we think higher probability setups favor breakout trades over knife-catching.

Analysts noted narrowing liquidity pockets, persistent clustering in implied volatility, and selective institutional flow patterns that influence near-term behavior. While the analysis leaned cautious, pro-crypto voices counter that bitcoin’s fixed issuance, broader international adoption, and continued institutional integration support a constructive long-run thesis. They argue that corrective phases clear excess leverage and help create more stable foundations for future appreciation as macro conditions gradually normalize.