Bitcoinâs Price May Not Soar Solely on Liquidity Growth
Bitcoin (BTC) might not break out of its current trading range just because of increased liquidity, according to some analysts. they believe that while global liquidity often rises with Bitcoinâs price, this link might not be as strong as many traders assume.
On March 28, Matrixportâs analysts shared thier thoughts on X. they noted that when central banks increase the money supply, some of this liquidity eventually reaches the crypto market. However, they warned that this doesnât necessarily meen Bitcoin prices will rise. The relationship between the two lacks a solid theoretical basis.
Matrixport pointed out that a 13-week lag between money supply growth and Bitcoinâs price action is often observed. Yet, thereâs no strong reason why this should consistently happen. They also cautioned that comparing Bitcoinâs price with global liquidity can be misleading. Both trends change over time, which can distort correlation analysis.
Without a clear catalyst, Bitcoinâs price could continue moving sideways, Matrixport suggested. They noted that apart from major events like the U.S. presidential election, Bitcoin has mostly traded sideways. While some traders still see liquidity trends as a key indicator, the analysts argue that crypto-native factors or macroeconomic policies may be more useful.
