Bitcoin versus global liquidity potentially paints a grim short-term picture for BTC price action.
Bitcoin is on “borrowed time” as global liquidity conditions turn against crypto and risk assets, new analysis warned.
In a thread on X on Dec. 6, Jamie Coutts, chief crypto analyst at investment firm Real Vision, delivered unwelcome news for Bitcoin
BTC
tickers down
$98,830
bulls.
Lagging BTC price faces new liquidity showdown
Bitcoin could well make further gains in this bull market, but the next three months may mark a pause
for the party. Coutts said liquidity conditions, as expressed by his Bitcoin MSI macro model, suggest pain may come next.
“Bitcoin has hit new ATHs in the face of a deteriorating liquidity backdrop,” he said.
“1. If conditions worsen, the rally, while euphoric, can only last for a limited time. 2. If conditions ease from here, then a pullback is warranted, but then off we go again.”
His findings came amid flash intraday volatility for BTC/USD,
which printed a “Darth Maul” candle and wiped out hundreds of millions of dollars of both long and short positions in a snap $10,000 correction.
Coutts said that the model helped him call both the start and end of the last Bitcoin bear market in 2022.
“The macro and liquidity dashboard shows unequivocally sustained bearish momentum for most metrics,” he said, alongside liquidity data.
“This is not a panic moment; it’s a warning. In these environments, $BTC posts its poorest returns.”
The next two to three months may see a troublesome trading environment return, Coutts said, adding that Bitcoin lags liquidity changes by around two months.
“This MSI indicator turned bearish in mid-October, but the Trump election win has (rightly) spurred a strong rally,” he said.
“Similarly, the model last went bearish in Feb but the ETF launch and flows kept BTC buoyant for
another month. However, a persistent bearish liquidity backdrop eventually caught up (it was also a highly leveraged rally that needed time to clear).”
