Traders Watch Liquidity Cycle as Bitcoin Faces Extremes

Howell says markets face increased volatility and risk-off behavior through early Q1 as part of a normal liquidity cycle.

He expects a new liquidity wave in Q1–Q2 that could restore Bitcoin momentum, driven by easing monetary conditions.

Rising institutional ownership may gradually reduce Bitcoin’s extreme swings, aligning with long-term adoption trends.

Michael Howell of CrossBorder Capital explained why traders may face risk-off pressure now before conditions improve next year. Howell detailed how liquidity cycles shape price behavior and future Bitcoin strength across institutions and digital asset markets globally.

Volatility Phase

According to Michael Howell, current conditions point toward increased price swings and unstable sentiment. However, he noted that this phase remains part of a broader liquidity sequence guiding market direction

He explained that traders currently reduce exposure as risk-off behavior expands through crypto markets. He added that extreme moves may persist into early next year, mainly through Q1. However, he stressed that such conditions follow historical patterns tied to prior financial disruptions

Notably, he framed the sequence as temporary stress before liquidity support strengthens. This transition may lead to future liquidity affecting Bitcoin positioning. Therefore, the focus moves toward timing around expected stabilization and renewed buying activity.

Liquidity Wave and Bitcoin Recovery Outlook

Howell stated that the next liquidity wave could restore stronger momentum for Bitcoin trading. Notably, he suggested this shift may emerge during Q1 or Q2 next year. He tied this outlook to improving liquidity flows rather than sudden market optimism.

He emphasized that liquidity expansion typically follows periods of contraction and volatility. However, this process unfolds gradually instead of leading to abrupt reversals. As a result, traders monitor monetary conditions closely for clear timing signals.

This evolving situation leads into how Bitcoin’s structure continues to change under institutional participation. Therefore, structural dynamics now remain central to understanding long-term price behavior.

Structural Changes in Bitcoin Ownership

Michael Howell described how rising institutional participation reshapes Bitcoin’s volatility profile over time. He explained that long-term holders reduce exposure while institutions increase accumulation and stability. However, he clarified that volatility still exists, though less extreme than earlier market cycles.

He compared Bitcoin’s asset growth to established technology adoption trends. Notably, he referenced an S-shaped curve representing gradual, sustained expansion. This curve shows broader acceptance and deeper integration into financial systems without rapid price overreaction.

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