Despite the 70% growth of the Bitcoin price in the first quarter of 2023, not all analysts believe that this digital currency can coinue its upward trend or even maiain its curre level of $30,000.
It is unreasonable to expect the price of Bitcoin to grow
According to Coielegraph, in its latest report, Bloomberg Ielligence pois out the close relationship between the performance of digital currencies and the liquidity level of the ceral bank.
As banks withdraw liquidity from the economy during inflation, the price of risky assets, including digital currencies, decreases. The start of the coractionary monetary policies of the US Federal Reserve also began at the same time as the price of Bitcoin reached its highest level in late 2021.
Despite the rece banking crisis, Bloomberg noted that the decline in the money supply (M2 (coins and bills held by the public that can be converted io cash) and bank deposits) means that liquidity is still shrinking.
Mike McGlone, chief strategist at Bloomberg Ielligence a part From this analysis he writes:
The value of risky assets usually fluctuates as liquidity increases or the money supply decreases in the United States, and the volume of bank deposits also represes a restraining factor in the growth of digital currency prices.
He noted:
With the volume of money and the value of commercial bank deposits down 2% year-on-year (the biggest drop since 1959), it is unreasonable to expect the stock market, crude oil, copper and the Bloomberg Galaxy Crypto Index (BGCI) to maiain their rece gains. do
These concerns come at a time when Bitcoin is struggling to turn its historic resistance io a support level and buyers seem unable to make a big change in the market.
On the topic of liquidity, other analysts have already noted that cryptocurrencies are now reacting to the actions of ceral banks other than the Federal Reserve. It is worth noting that China and Japan injected liquidity io the market this year.
Meanwhile, Bloomberg says the main question at the start of April is what will stop the liquidity squeeze?
More ceral banks that coinue to have coractionary monetary policies could mean a decline in the Bloomberg Galaxy Crypto Index. Our view is that Bitcoin will experience headwinds, but will eveually trade like gold and Treasuries.
The fall of the dollar index and the possibility of bitcoin price growth
According to market data, Bitcoin is currely trading in the $27,900 range.
In a (short-term) positive for risky assets, the US Dollar Index (DXY) once again fell below the 102 level.
Cold Blooded Shiller popular accou in twitter Examining this situation, he temporarily expressed optimism about the increase in the price of Bitcoin.
However, poiing to a support level, Justin Bennett predicted that the dollar index will return to its previous level in the future.
He warned:
As long as the dollar is still the world’s reserve currency, all the slogans that say “the dollar is dead” will be meaningless.
