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- Bitcoin’s next price surge may require more than just rising liquidity, analysts warn.
- Matrixport warns that liquidity growth doesn’t guarantee higher Bitcoin prices.
- Analysts suggest that factors like regulation and investor sentiment may drive Bitcoin’s price.
The next wave of Bitcoin’s price surge might require more than just rising liquidity. The idea that global liquidity is on the rise has received a lot of attention as a call to rally, but analysts are doubting it. Although Bitcoin fluctuates depending on liquidity, many people hardly realize the extent to which this relationship exists.
Analysts at Matrixport expressed concerns in a March post dated 28th. The platform pointed out that every time the central banks inject more money into the market, some of that liquidity flows into the crypto markets. However, they explained that this does not mean the price of Bitcoin will go up. Thus, it can be stated that there is poor correlation between the growth of accounts’ liquidity and BTC price.
Bitcoin’s Range-Bound Movement
The analysts also said that using global liquidity to compare with the Bitcoin price might not be accurate. Both data sets correlate with time for the different study periods that have been used for comparison. Bitcoin might exist in a consolidation range without a specific or specific incitement. Matrixport elaborated and has made estimations stating that the BTC price could be range-bound at the moment.
However, the extent of the cryptocurrency remains range-bound and has been experiencing limited volatility. It’s only had notable exceptions, such as the period in which it increased during the U.S. presidential elections last year.
Macroeconomic Influences on Bitcoin
Some traders still consider liquidity trends related. They think that an increase in the supply of money in the economy can cause an increase in Bitcoin’s price. However, Matrixport claimed that such a notion could be oversimplified. Some of the respondents opined that there could be other crypto-related or macroeconomic factors with a more significant influence.
Analyzing this issue, the analysts pointed out that the excessive concentration on the actual growth of liquidity can mislead all the traders. They also consider other factors as more important in determining the future direction of Bitcoin. The crypto market is not only influenced by fluctuations in liquidity. Other factors such as regulatory framework, investors’ perception, and technological advancements may play a significant role.
Bitcoin’s future remains uncertain. There will be no specific trigger to encourage a higher price increase, and thus, it will have a stable but steady growth. Liquidity is one of the factors that can affect the market, though it is not a determinant of the market. Analysts may believe that other factors may be responsible for the next big move in Bitcoin.
