Bitcoin breaks $106K as volatility spikes and market tests liquidity

Bitcoin rose above $106,000 as short-term volatility spiked, signaling a phase of liquidity testing on Binance.

The jump marks the third sharp move in less than 48 hours, driven by renewed speculation over US President Donald Trump’s proposed $2,000 “tariff dividends” and new on-chain data showing an increase in short-term volatility.

The rising volatility reflects the liquidity testing phase

Binance data analyzed by Arab Chain shows that Bitcoin’s 7-day realized volatility (RV-7d) got up to 0.410, well above the 30-day benchmark of 0.360. This divergence, with short-term volatility exceeding longer-term averages, suggests that the market is entering a liquidity testing phase, in which rapid repositioning by traders makes prices temporarily unstable without changing the broader trend.

According to Arab Chain, this setup often occurs when short-term traders dominate momentum and cause sudden intraday swings, while medium- and long-term investors remain steady, waiting for directional confirmation. In practice, this means that Bitcoin’s recent jumps and troughs are driven by speculative moves in derivatives and leveraged positions, rather than deep structural shifts in demand.

Binance’s data also indicates that this phase usually comes before major market moves. If the RV-7d continues to rise while the RV-30d remains unchanged, the market could soon experience price pressure, with BTC either pushing through the higher resistance levels or pulling back into new demand zones.

The Arab Chain analysis shows that such short-term bursts in volatility often arise when traders become more sensitive to news or economic signals, which can lead to overreactions in either direction.

In this case, those signals include recent political and economic developments in the US, where President Trump proposed a tariff dividend of $2,000 per person, re-igniting talk of potential liquidity inflows similar to those of the 2020 stimulus era.

You might also like:

XWIN Research Japan says the current market is much better prepared to handle this extra money than in 2020, thanks to the growth of spot ETFs, more involvement from major investors, and easy access to crypto through brokerage apps.

Policy tips and trading behavior determine the market outlook

Trump’s comments sparked BTC’s latest rally, with analysts estimating that his plan could inject around $600 billion into the US economy.

At the time of writing, the asset was trading above $106,000, having risen more than 4% in the past 24 hours. However, the price remains down about 1% this week and more than 8% over the past two weeks, showing continued pressure after hitting an all-time high in early October.

As noted by Arab Chain, if the RV-7d continues to rise without a corresponding rise in the RV-30d, Bitcoin may soon encounter a new turning point. Whether that leads to a decisive breakout above $108,000 or a pullback towards $100,000 will depend on how much liquidity the next wave of speculative and institutional capital brings.