Is Bitcoin on the Verge of Capitulation? Analyst Warns of Liquidity Squeeze
A crypto analyst suggests that Bitcoin (BTC) may be nearing a capitulation phase due to tightening on-chain liquidity. However, this could pave the way for an upcoming bullish market surge.
Key Points in Bitcoin’s Price Trajectory
Discussed in an insightful thread on X, crypto analyst Cole Garner highlights the potential for Bitcoin’s price to experience a downturn linked to on-chain liquidity constraints.
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Examining global liquidity trends, the analyst suggests a looming “buy signal” for digital assets. However, he cautions that crypto markets may face challenges before central bank interventions boost liquidity.
Garner references recent economic stimulants by Chinese central banks, hinting at potential market impacts. Despite previous efforts, the People’s Bank of China (PBoC) has refrained from injecting further liquidity, affecting risk-oriented assets such as cryptocurrencies.
With a declining supply of stablecoins compared to previous months, Garner observes a potential downtrend for digital asset prices in the short term.
Despite concerns, Garner points out Bitcoin’s recent price uptick on the 8-hour chart, maintaining a positive market outlook. Even if BTC retraces to highs in the upper $40k range, the overall sentiment remains optimistic.
Garner suggests that if BTC reaches its lower price range, traders should consider buying opportunities. Despite potential liquidity constraints, holders are advised to stay calm and avoid hurriedly selling their assets.
Adding to this perspective, another analyst named Ali shares similar sentiments, cautioning that Bitcoin may trend downwards towards the $52,000 mark unless it breaks through the $66,000 level.
Outlook for Bitcoin in 2024
As 2024 progresses, Bitcoin enthusiasts anticipate a market rally triggered by potential interest rate cuts from the US Federal Reserve. However, BTC faces obstacles in maintaining its upward trajectory.
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Crypto analyst Carl Runefelt highlights the crucial $64,000 resistance level for Bitcoin in the fourth quarter of 2024. A failure to break this barrier could result in further price declines.
Notably, Bitcoin’s recent price movement turned positive in October, raising hopes for a renewed uptrend similar to previous patterns. At the time of writing, BTC is trading at $60,711, with a slight dip in the past 24 hours.
Featured Image from Unsplash.com, Charts from X and TradingView.com
