Bitcoin global liquidity is showing strong recovery signals as macro trends shift toward risk-on assets. The last movement in the Bitcoin market only repeats a larger macro storyline in which the liquidity pattern across the world and the strength of commodities determine the following step of the digital currency. The most recent information shows that there are some main trends that may define the trend of the upcoming weeks of the development of $BTC and $ETH.
Bitcoin Global Liquidity and Gold’s Momentum Connection
The surge in Bitcoin global liquidity mirrors previous bull market conditions. Counting on comparing the chart of BTC to M2 Global Liquidity (involving stablecoins) we will see that there is a visible correlation. Every significant liquidity injection in the world economy whether due to central bank effect or increase in supply of stablecoins has been followed by a sudden rise in the price of Bitcoin.
The following relationship highlights the fact that Bitcoin is a highly liquid asset that becomes stronger when people put more money in risk markets. With the liquidity indicators moving back upwards, it may be the beginning of increased capital inflow back into crypto.
$170 Million in Liquids as Shorts Get Rinsed
During the last day, the crypto universe has been liquidated over 170m, and short positions suffered the most significant blow. Both Coins, Bitcoin and Ethereum, were the leaders of the squeeze as the prices rose, and the over-leveraged traders had not anticipated them.
Interestingly, interbank rates reversed to the negative side on major exchanges just before the move, which is an archetypal indication that the market was tipping too much on the bearish side. Such positioning may precondition the ideal scenario of a short squeeze, and Bitcoin did not disappoint.
Key Bitcoin Price Levels to Watch
Despite the current Bitcoin global liquidity, Bitcoin is technically still at a critical stage. The 105000-106,500 price range has served as a solid support line during the recent retracement. In the event that the bulls cannot rescue this zone, the next target to the downside is approximately at the zone of 100,000 psychological level, which may generate a lot of buying concentration.
Meanwhile, on the reverse, immediate resistance is close to the level of $110,000, a break and a close above these values would most probably be the sign of bullish momentum and open the way to the re-testing of all-time highs.
Gold’s Breakout Could Be Bitcoin’s Next Catalyst
One of the most missed leading indicators to the big rallies witnessed by Bitcoin has been the breakout of gold. Based on a 100-day lead model that has been used to accurately forecast every major rally in Bitcoin since 2019, on average, lead is gold to Bitcoin by about 100 days.
As the gold starts generating more and more new all-time highs, history has shown that the Bitcoin might be about to make another exponential leap. The bullish case is further burdened by the macro environment where the debt levels are still high, the fiscal expansion is in place, and the liquidity is being injected once again into the stream.
What Comes Next for Bitcoin
Amongst the short squeeze dynamics, major technical levels and the robust macro tailwinds, the setup of Bitcoin is becoming more constructive. In case of global liquidity expansion, and the breakout of the gold, then Bitcoin can become the next in line to have a parabolic rise that has characterized all the major bull cycles since 2019.
