Bitcoin (BTC) is trading cautiously optimistic despite recent market volatility. The world’s largest cryptocurrency is currently hovering around the $58,275 mark, registering a modest 1.25% intraday gain. While this represents a recovery from recent lows, BTC remains below its crucial 200-day Moving Average (MA), and the 20-day MA is ominously approaching a bearish crossover with the 200-day MA.
However, there’s a glimmer of hope for Bitcoin bulls. The asset has demonstrated resilience at lower price levels, with a strong rejection from the $56,000 support indicating a potential bottom formation. This bullish sentiment is echoed in the derivatives market, where open interest has surged from $26.65 billion to $29.35 billion in just 10 days. This suggests growing confidence among large traders.
The cryptocurrency market remains highly volatile, as evidenced by the $208.88 million in liquidations over the past 24 hours. While long positions bore the brunt of these losses, short positions were also impacted.
A Macroeconomic Tailwind
A potential game-changer could be brewing on the macroeconomic front. According to analyst James Coutt, central banks, particularly the Bank of Japan and the People’s Bank of China, have injected over $400 billion and $97 billion, respectively, into the global money supply. This massive liquidity injection is part of a broader $1.2 trillion expansion.
Historically, such periods of increased liquidity have coincided with Bitcoin bull runs. Coutt points to 2017 and 2020, when BTC surged 19x and 6x, respectively, during similar conditions. With the US dollar weakening, there’s growing optimism that Bitcoin could potentially skyrocket to $100,000 or more.
The global liquidity momentum model (MSI) has recently flashed its first bullish signal since November 2023, adding weight to the bullish narrative.
Bitcoin Price Prediction Could It Be 2x-3x Rally?
Despite the recent price dip and increased fear, uncertainty, and doubt (FUD), many analysts believe Bitcoin is poised for a significant rally. Strong hands holding onto their BTC and rising ETF inflows during price declines suggest underlying bullish sentiment.
Also Read: South Korea’s NPS Expands Bitcoin Exposure With $33.7M MicroStrategy Purchase
A continued decline in the US dollar index (DXY) is seen as crucial for providing the necessary tailwinds for a Bitcoin bull run. As central banks pump more liquidity into the system, the stage could be set for a potential 2x to 3x price increase.
While the road ahead is fraught with uncertainty, the combination of technical indicators, market sentiment, and macroeconomic factors is painting a cautiously optimistic picture for Bitcoin. However, investors should approach the market with caution and conduct thorough research before making any investment decisions.
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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