Bitcoin price: Could BTC be headed to $13,000 in the global liquidity crunch?

  • Bitcoin is considered a liquidity sponge by analysts, soaking excess monetary supply in times of crisis. 
  • The current global liquidity squeeze is having a magnified negative impact on Bitcoin price due to its illiquid supply of 77.15%. 
  • Bitcoin price could decline to the $13,000 level over the next month – before bouncing back to the $29,000 target, analysts say. 

Bitcoin price is heavily influenced by liquidity conditions – one of the most important factors in any market. The global liquidity crunch has impacted Bitcoin price in a major way and, as a result, analysts are presenting a bearish outlook for BTC.

Also read: Bitcoin price: Analysts believe BTC is king, Robert Kiyosaki bullish on Bitcoin

How the global contraction in liquidity has affected Bitcoin price

Sam Rule, senior crypto market analyst at Bitcoin Magazine argues that one of the most important factors in any market is liquidity. Liquidity can be defined in many different ways, but the analyst is looking at global liquidity and its impact on Bitcoin price. 

One high-level view of liquidity is based on the condition of central bank balance sheets across the world. During recent crises central banks have become primary conduits of liquidity for the economy through keeping interest rates low and buying up sovereign debt, mortgage-backed securities and other financial instruments. Rule argues that this infusion of liquidity has come about, however, from the purchase of assets that are overall riskier in nature. This has led to one of the largest rises in asset valuations globally, over the last 12 years, since the great financial crisis. 

Central bank balance sheets in the US, China, Japan and European Union have reached $31 trillion in 2022, nearly ten times their level in 2003. While this is a growing trend for the last two decades, 2020 fiscal and monetary policies in response to the COVID-19 pandemic took balance sheets to record levels. 

Total assets of major central banks and Bitcoins

Total assets of major central banks and Bitcoin 

Rule notes that Bitcoin’s new all-time high of $60,000 in March 2021, coincided with an annual peak in the rate-of-change in major central bank asset accumulation. 

Since then, however, central banks have reversed their previously expansive monetary policies to fight rising inflation, and now instead of pumping liquidity into the economy are drawing it out. The implication is that this policy reversal has been a major macro-driving force for BTC price’s decline over the last year, as well as volatility in all markets. 

Will Bitcoin price hit $13,000 or $29,000 first?

NekozTek, crypto analyst and trader, notes that active Bitcoin sales by miners stopped about a month ago. The sale of Bitcoin by miners increases the selling pressure on the asset and adversely affects BTC price. Miner reserves have declined consistently since the beginning of August 2022 and October 13 marks an increase in the reserves. The analyst is bullish on Bitcoin and expects the price to appreciate over the next few months.

Bitcoin miner reserve v. price usd

Bitcoin miner reserve v. price usd

Aditya Roy, crypto analyst and trader compared the 2018 bear market to the ongoing Bitcoin cycle and predicted that BTC could bottom in November, hitting the $13,000 level. 

Roy identified a support level at circa $18,000 formed by the multiple bottoms touched by price since June 2022. This level, were it to break, would likely see a volatile move south. According to the technical analyst the number of touches a level is subjected to increases the volatility of the final break when it comes, suggesting the risk of an explosive move south if the support zone at at $18,000 cracks. 

BTC-USD price chart

BTC-USD price chart

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content

Recommended Content

Editors’ Picks

Google, Apple could remove Binance from their app store on Philippines SEC request

Google, Apple could remove Binance from their app store on Philippines SEC request

The Philippines SEC has requested Google and Apple to remove applications controlled by Binance from their App stores. The exchange’s Philippines-based users are finding the exchange inaccessible to remove their funds. 

More Binance News

XRP rallies as Ripple slams SEC for penalties, asks regulator to establish likelihood of future violations

XRP rallies as Ripple slams SEC for penalties, asks regulator to establish likelihood of future violations

Ripple filed its response to the SEC lawsuit on Monday, arguing that XRP institutional sales before and after the court ruling show no disregard for the law. The firm asks for a civil penalty of no more than $10 million against the $2 billion requested by the SEC.

More Ripple News

Here’s why Ondo price hit new ATH amid bearish market outlook Premium

Here’s why Ondo price hit new ATH amid bearish market outlook

Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.

More Cryptocurrencies News

PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange

PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange

Pendle price is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin (BTC) price.

More Cryptocurrencies News

Bitcoin: BTC post-halving rally could be partially priced in Premium

Bitcoin: BTC post-halving rally could be partially priced in

Bitcoin (BTC) price briefly slipped below the $60,000 level for the last three days, attracting buyers in this area as the fourth BTC halving is due in a few hours. Is the halving priced in for Bitcoin? Or will the pioneer crypto note more gains in the coming days? 

Read full analysis