Bitcoin Has One Eye On Global Liquidity

Bitcoin Ends The Week On A Low

Last week, the Bitcoin market experienced a rollercoaster of activity, reflecting the broader volatility of the financial sector.

The week began positively, with Bitcoin climbing to a peak of $88,800. However, this optimism was short-lived as the market sentiment shifted, leading to a significant downturn.

The market witnessed increased liquidation activity, with long positions bearing the losses. Long position liquidations reached $1.21 billion, significantly higher than the $514.8 million in short liquidations. This imbalance highlights the challenge faced by bullish traders during the week.

A key driver of this bearish phase was the U.S. administration’s announcement of new trade tariffs, a significant external factor that dampened market sentiment and had a tangible impact on the Bitcoin market.

Additionally, hotter-than-expected inflation data further fuelled concerns about the economic outlook. The Federal Reserve’s preferred inflation gauge, the Core PCE, rose to 2.8% annually, exceeding market expectations. A signal that inflationary pressures remain persistent.

As the week concluded, Bitcoin’s price remained below its 200-day Simple Moving Average (SMA), a critical support level, leaving traders and investors cautious about the near-term outlook.

Positive Drivers 

Despite the overall negative trend, the bitcoin market has some bright spots.

If you look at the M2 global money supply, there is room for cautious optimism.

Bitcoin’s price historically tracks the M2 money supply but lags by around three months. If that correlation remains intact, then investors should anticipate a short-term pullback in price followed by a two—to three-week period of consolidation. This period of consolidation, which is a potential turning point, will likely end with upward momentum in the bitcoin price on or around 6 May.

Bitcoin ETFs continued to attract institutional interest, recording net inflows of $88.79 million for the week. The streak of daily inflows ended on Friday; however, that was at the end of the second consecutive week of positive inflows, highlighting sustained demand from institutional investors.

With macroeconomic uncertainties and market volatility persisting, expect the bitcoin market to remain on edge in the coming weeks.