By Chris Hollingworth 
After a promising start to the week, Bitcoin faced a setback as its price dropped by 3.5% to an intraday low of $84,120 on March 28. This decline occurred at a critical juncture where the price intersected with the descending trendline and the upper boundary of an ascending channel pattern, as depicted on the Bitcoin 1-day chart.
Currently, on the daily chart, Bitcoin is trading below the 200-day exponential moving average (EMA) once again. A potential close below this key indicator could signal further downside movement in the near term.
Global liquidity expansion plays a crucial role in influencing Bitcoin’s price trajectory. Recent analysis from Capital Flows highlighted that Bitcoin might experience a correction to the $72,000-$75,000 range if liquidity conditions in the financial system remain unchanged. Macro liquidity, which signifies the total capital available for investment in risk-on assets like equities and cryptocurrencies, is impacted by various factors such as interest rates, Federal Reserve policies, and overall market conditions.
Capital Flows noted that Bitcoin is showing increasing alignment with traditional risk assets, albeit remaining on the periphery of the risk curve. To attract capital inflows, investors may need to shift their focus from safer assets like bonds to riskier options such as Bitcoin or lower-quality banks in indices like the Russell.
Conversely, some analysts have suggested that the growth of the Global M2 money supply could potentially trigger a rally in Bitcoin’s price. Historical data indicates a correlation between movements in the Global M2 money supply and Bitcoin’s price trends. Colin Talks Crypto pointed out a predictive correlation between M2 supply and a potential Bitcoin rally starting around May 1, lasting for approximately two months.
It’s important to distinguish between macro liquidity and global M2 growth. While M2 measures the total money supply in circulation, macro liquidity assesses the ease with which capital can flow into risk assets. Even if the M2 money supply expands, macro liquidity may not increase if the new money is directed towards low-risk investments.
Bitcoin recently filled a CME gap between $84,435 and $85,000, which is a common occurrence in the market. Traders often view these gap levels as points of support or resistance based on market dynamics. The filling of the CME gap, along with a retest of the lower boundary of the ascending channel, could lead to a short-term rebound in Bitcoin’s price.
However, some traders have expressed caution about a potential long-term correction, with projections of new lows possibly by 2025. Immediate support levels are identified around $76,700, with a potential drop below $74,000 in the cards. Technical analysts like Crypto Chase have emphasized the critical juncture for Bitcoin’s price action, highlighting key levels for potential market movements.
In conclusion, various factors including global liquidity conditions, M2 money supply growth, and technical chart patterns play a role in shaping Bitcoin’s price movements. Investors should monitor these developments closely to gain insights into the cryptocurrency market’s future direction.
