For Bitcoin to experience its next significant rally, it may require more than simply an increase in liquidity, as analysts express skepticism about its overall influence.
Bitcoin (BTC) could remain in a phase of consolidation, with analysts questioning whether an uptick in liquidity is sufficient to initiate a price surge. They pointed out that while BTC’s price often rises with global liquidity, the correlation may not be as robust as many traders presume.
In a recent post on X, analysts highlighted that when central banks increase the money supply, part of that liquidity eventually finds its way into the crypto markets. However, they advised that this does not ensure a rise in Bitcoin prices, given that the connection lacks a strong theoretical basis.
“There may be a delay between the growth of the money supply and Bitcoin’s price movement, but there is no solid theoretical justification for why this delay should consistently be 13 weeks — the period that currently shows the clearest visual correlation.”
The analysts went on to caution that drawing comparisons between Bitcoin’s price and global liquidity could yield misleading interpretations, as both metrics are non-stationary and show trends over time, which can skew correlation analyses and lead to false conclusions.
Presently, lacking a definitive catalyst, Bitcoin’s price may continue to trade sideways. The analysts pointed out that aside from significant events, such as last year’s U.S. presidential election, the cryptocurrency has largely remained stagnant. While many traders still view liquidity trends as an essential indicator, the analysts contend that factors intrinsic to the crypto market or broader macroeconomic policies might provide more valuable insights.