Analysis: Market Liquidity is Decreasing, Recovery Still Needs a Consolidation Period
BlockBeats News, November 5th, CryptoQuant analyst Axel published a post stating that from a momentum perspective, the market will begin to attempt a rebound. Additionally, a large number of short positions have already accumulated, which could be a catalyst for the rebound. From a technical point of view, the market is already oversold, but history has shown that a recovery usually requires a period of consolidation.
Risk aversion deterioration is closely related to the increasingly scarce market liquidity. The U.S. government shutdown has led to significant budget cuts, while tax collection and debt issuance continue as usual, all of which have collectively caused a substantial shrinkage in financial system liquidity.
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