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BTC’s current price retracement coincides with a dip in US liquidity.
QCP, an asset trading firm, sees flat funding rates as a great opportunity for bulls.
As a seasoned crypto investor with a keen interest in market trends and liquidity dynamics, I’ve learned that Bitcoin’s [BTC] price movements are closely tied to traditional market liquidity. This correlation has been particularly evident in recent months.
Bitcoin [BTC] is a liquidity junkie and can quickly stall when there is not enough to survive on.
Based on the analysis of an anonymous cryptocurrency expert known as Ted Talks Macro, the relationship between Bitcoin’s price movements and those of traditional financial markets is more pronounced at present.
The analyst noted that,
As a crypto investor, I’ve observed that the relationship between Bitcoin (BTC) prices and traditional market liquidity continues to be significant. During times when BTC price movements slow down, there are often corresponding dips in market liquidity, similar to what we experienced in February.
As a researcher examining financial data, I discovered an intriguing correlation between events. In the chart I analyzed, the substantial market rally that occurred in 2021 aligns perfectly with a significant surge in liquidity, as indicated by the green-marked increase in USD Bank Reserves delta.
In a parallel development, the 2022 cryptocurrency bear market or “winter” took place when there was a lack of liquidity. Likewise, the market rally during Q1 of 2024 has been accompanied by a surge in available liquidity.
Regrettably, Bitcoin’s prices took a pause in the second quarter due to a minor decrease in liquidity. This incident highlights the sensitivity of Bitcoin’s pricing to fluctuations in the US money market and global funds.
Will Bitcoin resume its rally when liquidity improves?
Most analysts predict the liquidity space will improve in the second half 2024.
Arthur Hayes, the founder of BitMEX, has earlier expressed his belief that the US elections could provide an excellent chance for the U.S. Treasury to introduce more liquidity into the financial system.
As an analyst, I would express it this way: In my analysis, Ted Talks Macro holds a perspective akin to mine regarding the fiscal liquidity landscape. However, they anticipate more favorable conditions emerging in late 2024.
“Bank reserves are projected to decrease by mid-year, around Q3, due to the exhaustion of the RR facility. But take note that these reserves will likely rebound swiftly in the subsequent period as financial conditions undoubtedly become more favorable by 2025.”
Despite the unfavorable broader economic situation, QCP, a prominent crypto asset trading firm, saw this as an ideal moment to take a bullish stance in their trades. As expressed in part of their recent Telegram update:
“The financing for criminals, or ‘perp’ funding, remains stable. However, numerous altcoins exhibit negative funding rates, creating opportunities for investors to establish leveraged long positions.”
As a market analyst, I believe that if the current macroeconomic trends continue, the market pullback in April could present an excellent buying opportunity for late investors looking to enter the market at discounted prices.
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2024-04-30 12:07