Bitcoin Could See Capitulation as On-Chain Liquidity Tightens, Analyst Predicts
According to a crypto analyst, Bitcoin may be facing a potential capitulation due to a squeeze in on-chain liquidity. However, this could be followed by a strong bull market.
In a thread on BTC price analysis, analyst Cole Garner explained that tightening on-chain liquidity could lead to a downturn in the leading digital asset. Garner also mentioned that while there is a “buy signal” for digital assets due to global liquidity from central banks, more downside for cryptocurrencies may be expected before liquidity-enhancing measures take effect.
Garner pointed out that if China or other central banks do not inject additional liquidity, it could impact risk-on assets like crypto. He also noted a decline in the quarterly rate of change of stablecoins, potentially leading to lower prices for digital assets in the short term.
Despite the concerns, Garner highlighted the bullish market structure of Bitcoin and its higher high on the 8-hour chart. Even if BTC dips to its range lows, the overall price action is still considered positive. Garner advised traders and investors to consider buying at the range lows and not panic-sell their holdings.
Another analyst, Ali, echoed Garner’s outlook, stating that Bitcoin is stuck in a descending parallel channel and may slide to channel lows before a bullish breakout occurs.
Looking ahead, Bitcoin bulls anticipate interest rate cuts by the US Federal Reserve to fuel a new rally. However, BTC must overcome resistance levels to sustain its bullish momentum.
It is worth noting that Bitcoin’s price recently turned green in October, giving hope for another strong month for the asset. BTC currently trades at $60,711, down 2.4% in the last 24 hours.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice.