- Matrixport has predicted a period of temporary consolidation for Bitcoin.
- Bitcoin crashed to $95K from $102K since Tuesday.
- The strengthening US dollar and global shift in liquidity is to be blamed.
Bitcoin’s price dropped 5.7% in the past 24 hours, falling to $95,000 after peaking at $102,000 earlier this week. Matrixport, a leading digital asset platform, predicts this marks the start of a consolidation phase for the cryptocurrency, driven by global liquidity tightening.
Matrixport highlighted that changes in global liquidity often act as leading indicators for Bitcoin price action, typically observed over 13-week cycles. The firm linked this trend to the re-election of Donald Trump and the strengthening US dollar, which has tightened dollar-denominated liquidity.
Read also: Bitcoin $120K Predictions Surge with Trump’s Inauguration
Matrixport stated that it anticipates this “consolidation to be temporary” because the broader sentiment surrounding risky assets like Bitcoin and equities, remains “constructive.” However, the firm has advised traders to maintain caution during periods of liquidity shifts because these indicators have “proven to be reliable indicators in the past.”
Matrixport also noted that Bitcoin’s increasing integration with traditional finance rails has made it more sensitive to global liquidity conditions. Correlations between Bitcoin and the US dollar have strengthened, with tighter liquidity bolstering the dollar while exerting downward pressure on BTC prices.
Bitcoin Price Analysis
Considering the weekly Bitcoin chart below, it is clear that the accumulation of the world’s largest digital asset is on the rise in the long term and the demand from investors is on a steady rise since 2023.
On the other hand, the Relative Strength Index (RSI) on the weekly chart reads a value of 65.02 which means that the bulls are overall in control of the market leader’s price action and the gradient of the line suggests slight back-and-forth movement. In all, it is clear that the demand for BTC is still very high.
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