Significant Liquidity Boost Needed to Break Bitcoin's Sell-Off Cycle, Analysts Suggest
Summary:
This article discusses the recent price fluctuations of Bitcoin (BTC), emphasizing the necessity of a significant liquidity injection to break the current cycle of selling at every price rise. Analysts believe that a fresh all-time high for Bitcoin could end this cycle. The market currently requires high liquidity, encouraging investors to purchase more BTC, ultimately driving prices higher. Microstrategy, holding the largest corporate amount of Bitcoin, intends to raise $500 million to buy more Bitcoin, offering a potential source of the necessary liquidity. The article also informs about the ongoing consolidation phase of Bitcoin's price following halving, which could last till September 2024 as per some analysts.
In recent months, every Bitcoin rally was met with a sell-off, creating a vicious cycle that analysts believe can only be broken by a hefty liquidity boost that will push BTC to new record highs. Daan Crypto Trades, a crypto trader who chose to remain anonymous, suggested on a June 13 post that the market direly needs a strong liquidity push. Observations indicate that Bitcoin's price fluctuations, wavering between $66,500 and $72,000, have been causing a trend of selling at every price surge over the past several months, according to Daan Crypto Trades. The trader argued that a new record high for Bitcoin could fix this. Binance and Cointelegraph Markets Pro data show Bitcoin trading at $67,474, a 10% drop from its highest ever price of $73,808 on March 11.
Daan Crypto Trades maintained that prices can escalate quickly without requiring a specific catalyst, other than prices just rising. For such a rise, the market requires substantial liquidity allowing investors to buy more Bitcoin, effectively tightening bid-ask spreads and increasing prices. The required liquidity may soon be injected into the market given that Microstrategy, the corporation holding the largest amount of Bitcoin, plans to raise $500 million through a convertible senior note offering with the purpose of buying more Bitcoin.
In response to this news, Daan Crypto Trades said on a June 13 post “An additional $500M liquidity at your service”, implying that regular and increased investments in spot Bitcoin ETFs could add to the liquidity that could potentially lift Bitcoin out of its current price consensus. Another trader, Jelle, echoed these sentiments, stating the over $100 million investments into spot Bitcoin ETFs on June 12 and a possible $500 million from Microstrategy could provide the necessary market liquidity.
Despite these developments, Bitcoin's price remains in a re-accumulation phase following the halving, and this could persist until September 2024 as per renowned analyst Rekt Capital. In a recent social media post, Rekt Capital suggested that the market trend is punctuated with re-accumulation stages that could eventually break upwards over time. Following the 2020 Bitcoin halving, there was a consolidation period of 21 days before Bitcoin reached a then all-time high of $69,000 in November 2021, compared to 48 days of consolidation seen in 2017.
Currently, Bitcoin’s price still fluctuates between $67K and $72K. Daan Crypto Trades outlined that the price appears to be sticking to these horizontal levels. On the other hand, data from IntoTheBlock, a market intelligence firm, depicts the ongoing standoff between buyers and sellers. As per its In/Out of the Money Around Price model, the price currently lies between two key levels with a solid support region spanning $63,500 to $67,500, and a congested supply zone ranging from $67,600 to $70,500. Consequently, a high level of liquidity is crucial for Bitcoin's price to break through these resistances and escape the current consolidation.
This article does not aim to provide investment advice or recommendations. As every investment activity carries risk, readers should perform independent research to make informed decisions.
Published At
6/13/2024 8:18:03 PM
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