As Bitcoin (BTC) hovers around $61,272.46, analysts are weighing the implications of tightening liquidity on the cryptocurrency’s price trajectory. In a recent analysis shared on X (formerly Twitter) on October 10, renowned analyst Cole Garner warned of an impending capitulation that could push Bitcoin closer to its long-term range lows before any bullish momentum can take hold.
Liquidity Concerns Signal Market Shifts
Garner’s insights revolve around current on-chain phenomena that suggest a tightening liquidity landscape. He noted, “Liquidity on-chain is tightening: I smell capitulation incoming.” This statement encapsulates the growing concern among traders about a potential dip in BTC price action, as declining liquidity could act as a precursor to significant price movements.
Accompanying his analysis, Garner highlighted the Liquid Vision index, which measures global central bank liquidity. According to his observations, recent policy shifts from both China’s central bank and the United States Federal Reserve have contributed to this tightening. After unveiling substantial economic stimulus last month, the Chinese central bank surprised risk-asset traders by opting not to pursue further stimulus measures, raising questions about the future flow of capital into cryptocurrencies.
The Stablecoin Factor
Adding to the complexity, Garner pointed out a decrease in the supply of the two largest US dollar stablecoins: Tether (USDT) and USD Coin (USDC). He remarked, “Range lows before $100k? Total facepalm,” indicating that Bitcoin could test levels below $50,000 before any potential recovery toward the much-anticipated $100,000 mark.
While some traders are anxious about the immediate future, there remains a sliver of optimism. Garner and others in the market believe that even with the challenges posed by liquidity tightening, a turnaround could still be possible. The hope is that China’s revised stimulus approach might eventually lead to renewed capital inflows into the crypto sector.
The Outlook for October and Beyond
Despite the current volatility, bullish predictions for Bitcoin are still prevalent. Longtime trader Peter Brandt recently stated that BTC/USD could reach $135,000 within the next year, provided that critical support levels hold firm. This sentiment echoes the broader market outlook, which remains cautiously optimistic about Bitcoin’s long-term potential.
Also Read: Bitcoin (BTC) Stays Steady At $62K – Are 200 Days Of Consolidation Prepping For A $135K Breakout?
As of now, Bitcoin is down 4% month-to-date, prompting discussions about its next moves. The overarching question for traders remains: will BTC find the strength to recover before it tests those feared range lows, or are we witnessing the onset of a deeper correction?
In summary, while Bitcoin grapples with tightening liquidity and potential capitulation, the future may still hold bullish prospects for those willing to navigate the current market challenges. As analysts and traders closely monitor price action and macroeconomic indicators, the landscape remains ripe for volatility, making this a critical moment for Bitcoin enthusiasts.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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