BTC USD Feeble: Here’s Why Bitcoin Traders Are Preparing for Challenging Periods

BTC USD skyrocketed to unprecedented levels in August, exceeding $123,000 and reaching a high of $124,700. Since that peak, BTC traders have experienced a tumultuous journey. While prices found temporary stability last weekend, the decline at the start of the week remains unaddressed. The leading crypto asset continues to be constrained within the bear ranges established on August 18 and 19.

(Source: TradingView)

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Bitcoin USD Volatile: What Lies Ahead? Will Bulls Intervene and Halt the Decline?

The daily chart indicates that the upward trend that began in early April is still intact. As anticipated, Bitcoin ▼-0.28% prices didn’t follow a straight path. It took weeks for bulls to recover from $74,000 to $100,000. Once prices surpassed $110,000, Bitcoin bulls gained traction, pushing back against bears and achieving historic highs.

Nonetheless, following the rapid ascent to $124,000, the prices immediately reversed. Since August 14, BTC USD has been on a downward trajectory and could potentially dip below the crucial $110,000 threshold. Should that occur, experts anticipate a surge in long liquidations, which may further expedite the price drop to $100,000 or lower.

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Attention on Spot Bitcoin ETF Inflows and RRP

Multiple fundamental elements will influence whether bulls can find price floor or if sellers will continue to dominate. At the center of this are inflows to spot BTC ETFs. Recently, institutions have been redeeming shares for Bitcoin, potentially selling in secondary or OTC markets. If inflows do not pick up soon, retail investors might interpret this as a downtrend indicator and exit to secure their profits.

While institutions are influential, an analyst on X points out that BTC and crypto could face further declines due to the actions of the Federal Reserve, particularly as it restores its reverse repo facility (RRP). In recent months, the RRP balance has plummeted to nearly zero, creating unpredictability regarding future liquidity injections.

If anyone actually wants to know why Bitcoin is being sold off here, it is because all the market fluidity has been drained from the reverse repo facility finally and we don’t know where the next source of market fluidity injection will come from.

— Magoo PhD (@HodlMagoo) August 20, 2025

The Federal Reserve’s overnight Reverse Repo Facility (RRP) permits eligible establishments, including regulated banks and money trading market funds, to deposit surplus cash at the central bank in return for treasury securities, earning a minimal yield.

A high RRP balance indicates surplus liquidity in the financial system, whereas a low balance denotes tighter available volume, leading to less cash flowing into risky assets like crypto. Analysts interpret a low RRP balance as indicative of diminished market fluidity.

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The Importance of the Federal Reserve’s RRP Balance for BTC and Crypto

As of August 20, the RRP balance stood at $35 billion, the lowest since April 2021, down from $214 billion at the end of July. Should more funds be withdrawn, the balance could drop to zero by the month’s end. This decrease is primarily due to the Treasury issuing short-term bills to replenish its Treasury General Account (TGA), extracting cash from the financial system.

(Source: Federal Reserve)

Since Bitcoin is classified as a risk asset, it flourishes in high-liquidity settings where cash is plentiful, enabling institutions to make speculative moves. As market fluidity tightens, investors may retreat from speculative assets like Bitcoin and top Solana meme coins, worsening the downward trend.

Historical trends substantiate this. In 2022, Bitcoin plummeted to $15,500 after the RRP balance peaked above $2 trillion. As the RRP drained in 2023, BTC prices surged with the increase in available volume. With the RRP nearly emptied and the Treasury replenishing its TGA, excess cash will likely be absorbed, pulling Bitcoin and some of the best cryptos to buy down from their current positions.

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The post Bitcoin USD Weak: Here’s Why BTC Traders Are Bracing for Tough Times appeared first on 99Bitcoins.