Bitcoin’s recent performance sees significant fluctuations, but analysts remain optimistic about its future trajectory. In a recent update from the Connecting the Dots newsletter, analysts David Brickell and Chris Mills argued that Bitcoin may have reached a critical bottom as US liquidity conditions begin to show signs of easing. They believe that recent trends in liquidity mark a pivotal moment, suggesting that Bitcoin’s price could soon experience a rebound.
Despite a dip of approximately 3% Monday morning, bringing Bitcoin to just over $107,000, Brickell and Mills predict a potential surge in the upcoming weeks. Their assessment comes after traders on Bitcoin exchange-traded funds (ETFs) sold off $800 million in assets last week, according to data from DefiLlama. However, with $3.4 billion still logged in ETF inflows for October, they are confident that Bitcoin could reconnect with the broader risk market and potentially retest its previous all-time highs.
The analysts attribute this cautious optimism to recent changes in Federal Reserve policy. They noted that the Fed’s announcement to end quantitative tightening by December 1 would halt the contraction of its balance sheet, which could create a more favorable environment for Bitcoin and other risk assets. Further easing of liquidity is anticipated once the ongoing federal government shutdown concludes, which would release additional Treasury Department spending and increase bank reserves.
As the market waits for the next Federal Open Market Committee meeting slated for December, the CME FedWatch tool indicates a 67% likelihood of a rate cut. Analysts like Ryan Chow, CEO of Solv Protocol, point out that Bitcoin is currently consolidating within a range of $105,000 to $115,000. He suggests that as ETF allocations stabilize and become less speculative, volatility may decrease, setting the stage for a positive market shift.
Mike Maloney, CEO of blockchain technology firm Incyt, echoes this sentiment, noting a shift from exuberant optimism to a more cautious but still hopeful outlook. He anticipates that Bitcoin may reach new all-time highs by mid-November.
In the broader crypto landscape, Bitcoin has seen a 2.8% decline in the last 24 hours, trading at $107,700, while Ethereum has faced a steeper drop of 4.4%, trading at $3,723. The overall sentiments in the market indicate that while there are pressing uncertainties, the potential for upward movement remains strong as conditions evolve.
