This behavior is explained by two main factors: a contraction in liquidity and profit-taking by investors with large holdings.
The turning point between BTC and global M2 occurs when the US government begins to rapidly accumulate resources through the Treasury Department.
"It went from having $296 billion to $519 billion in one month, from July to August," explained influencer Manuel Terrones Godoy, who believes this change meant that part of the capital circulating in the market was absorbed by the US government, generating a contraction effect that ultimately affected Bitcoin.
In simpler terms: Although there was theoretically more money in the economy, that money didn't reach Bitcoin. Instead, it was controlled by the US government.
The Treasury's general account, known as the "current account" of the U.S. Treasury Department, marked a notable acceleration in the accumulation of dollars since mid-July, representing an increase of 124% in just one month:
The other factor preventing BTC from rising more sharply in price is that the market is facing a dynamic marked by profit-taking, which is slowing the digital currency's upward movement.
The professional trader Willy Woo attributes part of the slowdown to the so-called "OG whales," which are wallets that hold more than 1,000 BTC and acquired their coins in the early years of the protocol, at prices of $10 or less.
According to his analysis, after long periods of accumulation, these wallets began to sell. According to Woo, each bitcoin they liquidate requires an inflow of more than $110,000 in new capital to absorb it without causing the price to drop. This pressure adds to the reduction in liquidity and contributes to the pullbacks.
On-chain data confirms this dynamic. At the end of July, realized profits ranged between $6 billion and $8 billion, comparable to the peaks of March and December 2024, according to data provider CryptoQuant. This was the third wave of liquidations in this bullish cycle and was led by new whales who sold when the BTC price surpassed $120,000.
The current situation is also related to the natural cycle of a market experiencing strong gains. After a prolonged rally, it is common for prices to stagnate in a range and experience corrections. This time, the process coincides with liquidity tightening and massive sales by large holders, which intensifies the pause.
The outlook, therefore, shows a market on pause rather than in structural decline. Terrones Godoy insists that "a slight contraction in liquidity doesn't mean it's not liquid," because "we're coming from a huge amount of issuance and a hyper-liquid market. Today, there are dollars in the United States. A slight contraction in these dollars doesn't mean there aren't any."
Looking to the immediate future, two variables will be decisive: the magnitude of the US Treasury's liquidity absorption policy and the behavior of large Bitcoin holders. If the Treasury slows its rate of accumulation, some of the capital will return to the market. And if whales slow sales, the price could regain momentum. However, if both factors continue, the sideways movement could extend.
In short, Bitcoin and other cryptocurrencies are facing a mix of technical and fundamental factors that explain the slowdown in prices. The market did not lose overall liquidity, but some capital was frozen in official accounts. At the same time, profit-taking shows that, although the underlying trend remains bullish, the short term will be marked by pauses and corrections.
The key, then, lies in the balance between monetary issuance, economic policy decisions, and the behavior of the whales, who continue to control a significant portion of the supply.
