Bloomberg Analyst Raises Concerns About Bitcoin’s Vulnerability to Contracting Global Liquidity
Bloomberg Intelligence’s crypto market analyst Jamie Coutts is sounding the alarm on Bitcoin, cautioning that BTC is becoming susceptible to the shrinking global liquidity. According to Coutts, Bitcoin triggered an “exit signal” in mid-July when it reached $29,500, a level that currently stands about 11% higher than the current price.
Bitcoin is presently trading at $26,187. Coutts emphasizes that for Bitcoin to turn bullish, there needs to be an expansion in global liquidity levels. However, he notes that the contraction in global liquidity (money supply and central bank balance sheets) has slowed down but remains significantly negative. Until this trend reverses, Bitcoin is unlikely to experience upward movement and may even decline further.
Regarding liquidity levels in the US, Coutts points out that although the US Liquidity index has recently shown some improvement, it remains range-bound and signals noise. A meaningful upward push would likely require a policy change from the Federal Reserve, which is unlikely to happen in the near term.
Coutts further explains that while the potential approval of a spot Bitcoin exchange-traded fund (ETF) in the US could be a positive catalyst for crypto markets in the long run, institutional investors are unlikely to show significant demand for digital assets until liquidity levels rise.
Hot Take: Bitcoin Faces Uncertainty Amidst Contracting Global Liquidity
Bitcoin’s vulnerability to contracting global liquidity raises concerns about its future performance. Bloomberg Intelligence analyst Jamie Coutts warns that BTC triggered an “exit signal,” indicating a potential downward trend. With global liquidity levels still contracting, Bitcoin’s ability to turn bullish remains uncertain. Despite the anticipated approval of a Bitcoin ETF in the US, institutional demand for digital assets is unlikely to surge until liquidity rises. The crypto market will closely monitor liquidity indicators and central bank policies for any potential shifts that could impact Bitcoin’s trajectory.
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