Potential Bitcoin Decline to $72K Amid Macro Liquidity Concerns
Bitcoin faced a 3.5% decline to $84,120, dropping below the 200-day EMA. Analysts suggest a potential price correction to $72,000-$75,000 if liquidity conditions remain unchanged. The global M2 money supply might spark a rally; however, macro liquidity remains critical in determining capital flow into riskier assets. Recent CME gaps could lead to short-term price movements, with warnings of potential long-term corrections.
Bitcoin experienced a decline of 3.5% on March 28, falling to an intraday low of $84,120, following a brief positive start to the week. The drop occurred near the descending trendline and the upper limit of the ascending channel pattern. Currently, Bitcoin’s price is below the crucial 200-day exponential moving average (EMA), with the potential of further declines if it closes beneath this indicator.
According to an analysis by Capital Flows, Bitcoin could drop to the $72,000-$75,000 range if macro liquidity conditions remain unchanged. Macro liquidity is defined as the total available capital in the market that can easily flow towards riskier assets such as cryptocurrencies, influenced by interest rates, Federal Reserve policies, and market parameters. The analysis indicates a “greater convergence” between Bitcoin and traditional risk assets, suggesting a necessary shift in investor behavior towards more speculative investments.
Conversely, some analysts argue that the increase in the Global M2 money supply could lead to a rally for Bitcoin. Historical correlations between Global Liquidity, particularly M2 growth from major central banks, and Bitcoin’s price movements suggest a potential price rise around May 1, which could sustain for two months. However, while M2 represents total money supply, macro liquidity emphasizes how easily capital can enter risk assets. Despite an increase in M2, macro liquidity may not change if the money remains in safer investments.
Bitcoin’s recent upswing has created a CME gap between prices of $84,435 and $85,000, which traditionally tends to fill. Following the latest dip, traders may observe a short-term bounce as the CME gap corresponds with a retest of the lower range within the ascending channel. Nonetheless, some market participants highlight risks of a long-term correction, potentially leading Bitcoin to breach $74,000 by 2025. Immediate support is identified around $76,700 before this possibility gets realized.
Technical analysts such as HTL-NL and Crypto Chase characterize the situation for Bitcoin as critical, with both indicating potential trading strategies depending on upcoming price movements. As Bitcoin navigates these pivotal thresholds, market participants are advised to remain cautious due to the inherent risks of investing and trading in cryptocurrencies.
In summary, Bitcoin is currently experiencing downward pressure, with potential corrections predicted due to macro liquidity conditions. Analysts suggest that the interaction between the M2 money supply growth and prevailing liquidity may ultimately influence Bitcoin’s trajectory. Additionally, the CME gaps created during recent price movements could offer short-term opportunities for traders. However, investors should remain vigilant of market signals and inherent risks associated with cryptocurrency investments.
Original Source: cointelegraph.com
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