Bitcoin’s $100K surge slowdown is likely attributed to liquidity factors and the halted momentum of Nvidia’s rally.

Bitcoin (BTC) has been unable to break out of its current price range between $90,000 and $100,000 for the third consecutive week, with the exception of a short-lived surge past the $100,000 mark on December 5. This prolonged indecision has led to a sense of stagnation among traders, and two key factors appear to be hindering further upward movement.

The first factor is the slowdown in liquidity inflows into the crypto market, particularly from sources like spot exchange-traded funds (ETFs). As liquidity growth has decelerated, the bullish momentum driving the market has waned. According to 10x Research, the market liquidity impulse index, which tracks stablecoin minting, BTC ETF inflows, and changes in futures market parameters, has dropped significantly—from more than $15 billion in early November to $7 billion in recent weeks. This reduction in liquidity is seen as a contributing factor to Bitcoin’s struggles in maintaining prices above the $100,000 level.

“Liquidity’s slowing rate of growth may explain why Bitcoin is failing to stay above the $100,000 mark,” said Markus Thielen, founder of 10x Research. The liquidity indicator’s lower highs are diverging from Bitcoin’s price, signaling a bearish trend.

Stablecoins—cryptocurrencies pegged to assets like the U.S. dollar—are frequently used for crypto purchases, while ETFs provide a way for investors to gain exposure to Bitcoin without owning it directly. The same holds true for CME’s cash-settled futures contracts.

The second factor impacting Bitcoin’s price movement is the cooling off of Nvidia’s (NVDA) stock rally. Nvidia, a major chipmaker and a leader in the AI sector, has become a key indicator for risk assets, especially following the emergence of AI tools like ChatGPT. Bitcoin and Nvidia have shown a strong correlation since both assets bottomed out in late 2022, with Bitcoin following Nvidia’s price trajectory, except for a brief period in the summer when fears about supply overhang dampened Bitcoin’s momentum. Currently, the three-month correlation between Bitcoin and Nvidia is 0.6.

According to analysts at TheMarketEar, Bitcoin’s rise from $70,000 to $100,000 post-U.S. election reflects a convergence with Nvidia’s rally. While the two assets are fundamentally unrelated, they share a similar market psychology. Nvidia has outperformed Bitcoin this year, with Bitcoin rising 130% and Nvidia gaining 172%, according to TradingView data.

However, Nvidia’s growth has stalled since mid-November, with the stock showing signs of a bearish reversal, such as a head-and-shoulders pattern. Additionally, the one-year put-call skew has shifted to neutral, with calls and puts trading at similar levels, signaling a reduction in bullish sentiment compared to earlier in the year.

As excess bullish sentiment fades from the crypto market, as noted in the Crypto Daybook Americas, leverage levels are returning to more sustainable levels. While Bitcoin could still attempt to break through the $100,000 barrier, the success of this breakout will largely depend on the return of liquidity inflows and broader market sentiment.