As we delve into the dynamics of the cryptocurrency market, insights from a seasoned crypto analyst suggest that Bitcoin (BTC) might be on the brink of capitulation due to tightening on-chain liquidity. Interestingly, this potential downturn could set the stage for an ensuing “full bull” market.
Bitcoin: Lower Before Higher?
In a comprehensive analysis shared on X, crypto analyst Cole Garner highlighted the possibility of an imminent capitulation for Bitcoin, the leading digital currency. The anticipated downturn is primarily attributed to a tightening of on-chain liquidity, which has been a significant factor influencing BTC’s price movements.
Global Liquidity Trends and Buy Signals
Garner’s analysis extends beyond individual asset performance, incorporating global liquidity trends from central banks worldwide. He perceives a “buy signal” for digital assets, although he cautions that cryptocurrencies might experience further declines before benefiting from liquidity-boosting measures by central banks.
In a notable observation, Garner mentioned, “If China doesn’t ring that bell, the Fed or Japan should do the job,” alluding to recent economic stimulus efforts by China’s central bank aimed at reviving a lackluster economic outlook. However, the People’s Bank of China (PBoC) recently opted against injecting additional liquidity, dampening expectations for risk-on assets like cryptocurrencies.
Stablecoin Supply and Market Dynamics
Another critical point in Garner’s analysis is the reduced supply of stablecoins compared to early October 2024. By examining the “Bitfinex grail,” which refers to the combined supply of leading stablecoins USDT and USDC on the exchange, Garner observed a declining quarterly rate of change. This trend could potentially lead to short-term price drops for digital assets.
Despite these concerns, Garner highlighted a positive technical indicator: Bitcoin has printed a higher high on the 8-hour chart, maintaining a bullish market structure. Even if BTC dips to its range lows in the high $40k bracket, the overall price action remains optimistic.
Strategic Opportunities for Traders
Garner advised that should BTC reach its range lows, traders and investors might consider buying at that price point. He emphasized the importance of not panicking and selling off current holdings, even if liquid cash is scarce.
Echoing Garner’s sentiments, another crypto analyst, Ali, pointed out that Bitcoin is currently navigating a descending parallel channel, heightening the risk of sliding to channel lows of around $52,000. Ali emphasized the necessity for BTC to surpass the $66,000 mark for a bullish breakout.
Can Bitcoin Achieve New All-Time Highs in 2024?
With the remainder of 2024 ahead, Bitcoin enthusiasts are optimistic about potential interest rate cuts by the US Federal Reserve (Fed) to ignite a new rally. Nevertheless, BTC must overcome several obstacles to maintain its bullish trajectory.
Critical Resistance Levels
Carl Runefelt, a renowned crypto analyst, recently noted that BTC must breach the $64,000 resistance level to trigger a rally in Q4 2024. Failing to surpass this pivotal price point may result in further declines.
In October, Bitcoin’s price turned positive, sparking hopes of another “Uptober” for the asset, characterized by significant price surges. As of the latest update, BTC trades at $60,711, reflecting a 2.4% decline over the past 24 hours.
As the market evolves, Bitcoin’s journey towards potential new highs in 2024 remains a subject of keen interest among traders and investors alike.
