The month of March has proven challenging for many markets, with the U.S. stock market suffering decline and Bitcoin losing around 3% of its price.
This broader market weakness coincides with Bitcoin’s struggles, and many experts are pointing to a common culprit—global liquidity. With liquidity hitting rock bottom, could the cryptocurrency be gearing up for a reversal? Let’s break down the potential for a BTC rally and what to watch out for in the coming weeks.
Many experts believe that Bitcoin’s price and global liquidity are closely connected, with an 80% correlation between the two.
This means that when global liquidity improves, Bitcoin is likely to follow suit. Since the liquidity in the market has reportedly hit its lowest point, it raises the possibility that BTC price could soon recover.
The global liquidity slump, driven by several macroeconomic factors, has had a significant impact on Bitcoin’s performance. With liquidity levels now reportedly at their lowest, a reversal could be imminent if liquidity begins to rise once again. This presents a strong case for Bitcoin’s potential rebound.
Key Indicators to Watch for Bitcoin’s Potential Rally
While global liquidity may provide the foundation for a price rally, there are several key indicators that could signal when Bitcoin is about to break out.
Resistance Levels
Bitcoin is currently trading at around $84,185.01. However, several price levels need to be broken for the biggest cryptocurrency to regain upward momentum. Analysts are particularly focused on resistance points at $87K, $90K, $92.5K, $94K, and $95K. If Bitcoin can break through these resistance levels with strong volume, it would suggest that buyers are overwhelming the sellers, paving the way for higher prices.
These resistance levels are crucial for investors to watch closely. A solid breakout past these points could trigger a more significant rally for Bitcoin.
Net Flow on Exchanges
One of the most important indicators of Bitcoin’s market sentiment is the net flow of the digital asset on and off exchanges. When the cryptocurrency is moved off exchanges, it indicates that investors are confident in the asset’s long-term prospects. In contrast, moving BTC onto exchanges can be a sign that traders are looking to sell or take profits.
According to recent data from Coinglass, Bitcoin’s total exchange balance stands at 2,197,123.37 BTC, with a 24-hour change of +16,629.17 BTC. This shows a steady net flow of the digital asset onto exchanges. A large net outflow, on the other hand, could be a positive signal for Bitcoin’s future performance.
What’s Next?
As Bitcoin continues to navigate turbulent waters, the potential for a reversal remains tied to global liquidity. With the reported bottoming out of liquidity, Bitcoin may soon follow suit and begin its recovery.
In the meantime, investors should keep a close eye on resistance levels and Bitcoin’s exchange flows. A breakthrough in these indicators would suggest that BTC is preparing for a strong rally. Whether or not the price can rise from its current lows will depend on these key factors and the broader market sentiment.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
Source: https://coindoo.com/how-the-global-liquidity-can-help-bitcoin/