Bitcoin experienced its longest weekly decline in over a year, highlighting a deeper structural liquidity problem that extends beyond leveraged trading activities. Bitfinex, a cryptocurrency exchange, highlights this trend, noting the recent 30% drop as evidence of a broader market shift into an increasingly fragile liquidity regime heading into 2026. The report cites several contributing factors: record liquidation events, collapsing order book depth, and a tightening macro environment where liquidity is shrinking across asset classes. Over $19 billion in leveraged positions were wiped out during the Oct. 10 crash, followed by another $3.9 billion last week, signaling continued deleveraging that has yet to be fully reset. Short-term holders are now facing severe losses, exceeding $523 million per day – levels last witnessed during the 2022 market downturn. Order book liquidity in major exchanges has declined by roughly 30% since October, leaving the market highly sensitive to even minor flows. The report also points out that Bitcoin has historically peaked ahead of equities, a pattern observed in previous cycle peaks, suggesting crypto may be acting as a leading indicator of broader risk-asset weakness. With fading rate-cut expectations and elevated sovereign yields, liquidity remains constrained. The impact of El Salvador’s recent purchase of 1,090 BTC (their largest ever) while removing some supply from circulation, does not provide relief to the short-term market depth, as it also contributes to a shrinking tradable float – amplifying volatility. Lastly, a new regulatory overhang is emerging with the White House’s proposal for global coordination of reporting on foreign-held crypto. This could impact offshore liquidity and institutional flow patterns, according to Bitfinex. The report emphasizes that Bitcoin is transitioning into a structurally thinner market where price swings may be sharper, even as long-term adoption continues.