Journalist
Posted:
Bitcoin is not moving as it should. As global liquidity continues to increase, BTC’s numbers look somewhat different. Traders seem cautious and the necessary blind faith is still lacking.
So where do we go from here?
Liquidity is booming, BTC is not following
The global money supply is at a record high. The US, China, Japan and the Eurozone have all expanded M2 to new peaks, so there is abundant liquidity in the major economies.
So far, this setup has favored risky assets like Bitcoin. Still, BTC remains nearly 30% below its all-time high.
Source:
Liquidity is increasing, but that’s also true has not yet been achieved the speculative markets not yet. Instead, capital is waiting it out as uncertainty and tight financial conditions persist.
When liquidity eventually turns into risky assets, Bitcoin [BTC] will definitely take a step up.
Is it too early?
The energy value oscillator shows BTC at levels last seen a decade ago as the market was building its next big cycle. This metric tracks the energy poured into the network through mining and hashpower.
Deep lows usually meant longer-term lows. No tops.
Source:
This cycle never entered the overheated “red zone” seen during previous bull market peaks.
That fits with what we see elsewhere; tighter liquidity, a slow-moving business cycle and risky assets that have not yet fully recovered. The pressure is mounting to go somewhere, and the big picture remains to be seen.
Derivatives confirm the hesitation
Bitcoin’s total Open Interest is on a downward trend, approaching $27.3 billion, after declining. Traders reduce their exposure and do not indulge in leveraged bets.
At the same time, financing rates remained slightly positive at the time of writing, which represents a balanced positioning.
Source: Coinalyse
Simply put, leverage is removed from the system. Speculators take a step back and wait before injecting new capital. Such a reset usually happens before big moves.
If liquidity does turn into risky assets, Bitcoin still has plenty of room to absorb it without overheating.
Final thoughts
- Liquidity is increasing, but risk appetite is not yet enabled.
- With leverage reduced and energy metrics near cycle lows, BTC may be drying up.