Potential Bitcoin Price Correction Due to Macroeconomic Factors
Bitcoin has seen a notable decline to $84,120, raising concerns about price correction to the $72K-$75K range due to macro liquidity conditions, according to analysts. While some predict a potential M2-related rally, differentiation between macro liquidity and total money supply remains vital. Recent CME gaps suggest short-term market behavior may impact Bitcoin’s price in the coming months.
Recently, Bitcoin experienced a decline of 3.5%, hitting an intraday low of $84,120 on March 28, following a positive start to the week. This price drop occurred near a descending trendline and the upper boundary of an ascending channel pattern. Currently, Bitcoin is trading below the 200-day exponential moving average (EMA), and a sustained dip below this level could lead to further depreciation in value.
According to macroeconomic market analyst Capital Flows, a continued lack of favorable liquidity conditions may lead Bitcoin to correct to the $72,000-$75,000 range. Macro liquidity encompasses the available capital in the financial system that can flow into higher-risk investments such as equities and cryptocurrencies. It is impacted by factors including interest rates and the policies of the US Federal Reserve. The analysis suggests Bitcoin’s increasing alignment with traditional risk assets, necessitating a shift in investor mindset from safer investments to riskier ones, such as Bitcoin.
Conversely, some analysts note that an increase in the Global M2 money supply may stimulate a Bitcoin rally. Historical trends indicate that changes in M2 growth from leading central banks correlate with Bitcoin price fluctuations. Cryptocurrency commentator Colin Talks Crypto suggests a potential rally beginning around May 1 that could last for two months, determined by the predictive correlation between M2 supply and Bitcoin.
It is crucial to differentiate between macro liquidity and global M2 growth; while M2 tracks the total money supply, macro liquidity focuses on the ease of capital flow into risk assets. Even with an increase in M2, macro liquidity may stagnate if the funds are redirected to low-risk investments, according to Capital Flows.
In terms of market mechanics, Bitcoin has created a CME gap between $84,435 and $85,000 following its recent price rally. Typically, gaps are filled when the price revisits them, acting as either resistance or support depending on market direction. Bitcoin’s recent performance indicates it filled this CME gap on March 28, which may result in a temporary price rebound. This behavior aligns with a retest of the lower range of the prevailing ascending channel pattern.
However, crypto trader HTL-NL indicated a potential long-term correction, predicting further declines in 2025 with immediate support seen around $76,700 before a potential drop below $74,000. Technical analyst Crypto Chase remarked that the current market scenario for Bitcoin is precarious, labeling it as a “do or die” situation, suggesting that its future performance is critical now.
In conclusion, the current market for Bitcoin reflects an intricate interplay of macroeconomic factors influencing liquidity and capital flow. Analysts highlight the potential for Bitcoin to retrace to the $72,000-$75,000 range due to prevailing liquidity conditions, while contradictory indicators from Global M2 supply may suggest upcoming bullish trends. Understanding the nuances between macro liquidity and money supply will play a crucial role in forecasting Bitcoin’s movements. Active monitoring of price levels and market sentiment will be essential for investors moving forward.
Original Source: www.tradingview.com
Post Comment