Bitcoin faced a setback on March 28, dropping 3.5% to an intraday low of $84,120 after a positive start to the week. This price drop occurred just below a key trendline and threatens to push BTC below its 200-day exponential moving average, possibly leading to further declines. Analysts suggest that if liquidity conditions stay the same, Bitcoin could correct down to the $72,000-$75,000 range. However, an increase in global money supply might trigger a rally around May 1. Traders are closely watching the recent CME gap, as filling this gap could lead to a short-term bounce or signal deeper corrections ahead. Always remember to do your own research before investing.
Bitcoin Price Analysis: Key Levels to Watch After Recent Decline
After a promising start to the week, Bitcoin (BTC) has faced a setback, dropping 3.5% to an intraday low of $84,120 on March 28. This decline occurred as Bitcoin hit the critical descending trendline and the upper limit of an ascending channel pattern. Such technical structures often signal potential reversals or corrections in the Market.
As per the daily chart, Bitcoin is currently trading below its 200-day exponential moving average (EMA). A sustained close below this crucial level could spell more trouble for the crypto’s price, inviting further downside movement.
Global Liquidity and Its Impact on Bitcoin
Looking ahead, global liquidity could play a significant role in Bitcoin’s price trajectory. Analysts from Capital Flows suggest Bitcoin might see further corrections down to the range of $72,000 to $75,000 if liquidity conditions remain unchanged. Macro liquidity describes the available capital in the financial system that can swiftly flow into riskier assets like cryptocurrencies. It is impacted by factors such as interest rates and policies set by the US Federal Reserve.
Bitcoin appears to be aligning more closely with traditional risk assets, but still operates on the fringes of the risk curve. For investors to shift their capital from safer assets, there must be a change in sentiment, focusing more on riskier investments like Bitcoin.
Predictors of Future Trends
Colin Talks Crypto, a well-known crypto commentator, expressed optimism that the correlation between global M2 money supply—total money in circulation—and Bitcoin may signal a rally around May 1, potentially lasting for two months. However, it’s essential to differentiate between M2 growth, which tallies money supply, and macro liquidity, which reflects how easily capital can flow into riskier investments.
Despite M2 growth, if funds are staying within low-risk assets, macro liquidity may not improve. Capital Flows pointed out that the current level of money in the system is not expanding as rapidly as before.
CME Gaps and Bitcoin’s Future Movements
Bitcoin’s recent surge created a CME gap between $84,435 and $85,000. These gaps often get filled, suggesting a potential short-term bounce after filling. On March 28, Bitcoin filled this gap, aligning with a retest of the lower range of its ongoing ascending channel.
However, analysts remain cautious. Some traders, like HTL-NL, pointed out a potential long-term correction could push Bitcoin prices below $74,000, while others emphasize that this is a definitive moment for Bitcoin—the price must hold above certain levels to avoid further declines.
Final Thoughts
The crypto Market remains volatile, and while opportunities are present, investors should remain vigilant. Understanding the interplay between global liquidity, Market sentiment, and technical indicators is vital in navigating Bitcoin’s price landscape. Every trading move carries risks, so it’s crucial for individuals to conduct thorough research before making investment decisions.
What is causing the drop in Bitcoin price to $72K?
Analysts mention that ‘macro liquidity’ conditions, such as changes in interest rates and inflation, can affect Bitcoin’s price. When liquidity is tight, investments in crypto might drop, leading to a price decrease.
Will the Bitcoin price stay at $72K?
It’s hard to say for sure. The Market is very volatile. If the liquidity conditions change or investors become more positive, the price might recover. However, it could also drop further if the situation worsens.
How do macro liquidity conditions affect Bitcoin?
Macro liquidity refers to the overall availability of money in the Market. When liquidity is low, it means there are fewer funds available for investment. This can reduce demand for assets like Bitcoin and lead to price drops.
Should I sell my Bitcoin now?
It’s important to consider your own financial situation and goals. If you’re worried about the price drop, you might think about selling. However, many experts recommend holding unless you need the funds, as prices can bounce back.
What should I do to stay updated on Bitcoin price changes?
You can follow news platforms and financial websites that cover cryptocurrency updates. Also, social media and trading apps can provide real-time information to help you make informed decisions.