Key Takeaways
- •Fresh on-chain data shows BTC’s underlying liquidity beginning to recover.
- •On-chain analyst Willy Woo says that’s a signal that historically precedes BTC price strength by roughly two weeks.
- •As Trump declares America the Bitcoin superpower of the world, the window of pain could be over for Bitcoin and the crypto market.
Signs of Recovery Amidst Market Turbulence
Markets don’t move in straight lines, and neither does the BTC price. After weeks of turbulence that left traders counting their scars, the air could be starting to clear. Amid panic after Bitcoin briefly dipped below $100,000 and veteran traders warning of weak hands being shaken out, fresh signs of hope are emerging.
According to on-chain analyst Willy Woo, Bitcoin liquidity is making a recovery. This trend usually precedes a higher BTC price. He stated:
Liquidity behind BTC starting to make a recovery (see leading signal, dotted line). If this recovery continues, typically price confirms approx 2 weeks later.
This development is encouraging for all market participants except those actively selling during periods of panic.
A Painful October for the BTC Price
The last few weeks for Bitcoin have been marked by significant price declines. Just as the crypto community was anticipating a bullish October, surprise tariff announcements triggered a sharp sell-off in crypto prices.
The October sell-off was primarily a technical event, rather than a reflection of changes in the long-term thesis or Bitcoin fundamentals. More than $1 trillion in value was liquidated across the crypto market as leverage collapsed and market structure deteriorated.
With an average of 300,000 traders being liquidated daily, the crypto market exhibited extreme volatility, heavily influenced by political statements and news headlines.
However, according to The Kobeissi Letter, the downturn was largely driven by excessive leverage, not a fundamental loss of confidence. This period can be seen as a market correction where excess leverage was purged, long-term holders acquired assets, and coins were moved to secure storage.
Periods of market pain often pave the way for new growth. With on-chain data indicating a recovery in liquidity, the BTC price is expected to follow suit. Historically, a turnaround in liquidity has preceded a price inflection point by approximately two weeks.
If historical patterns hold true, mid-November could signal a bullish turn for the market, potentially restoring confidence in cryptocurrencies.
Macro Tailwinds Aligning
Bitcoin's price movements are not solely determined by technical factors; macroeconomic conditions also play a significant role. Recent signals from the Federal Reserve regarding quantitative tightening (QT) are viewed positively by risk assets.
The likelihood of a prolonged liquidity squeeze is diminishing, and market discussions are increasingly focused on the potential for further fiscal stimulus leading up to the election cycle. With the government shutdown being the longest in US history, markets anticipate a resolution soon. This could lead to increased market activity and capital flowing into assets like Bitcoin.
A Fresh Trump Endorsement Boosts Bitcoin
In a surprising development that pushed the BTC price back above $103,500, former President Trump took the stage in Miami and declared:
“We’re making the United States the Bitcoin superpower, the crypto capital of the world.”
This statement from a prominent political figure provides significant backing for digital assets. For traders, Trump's endorsement goes beyond political rhetoric; clear policy regarding digital assets could potentially trigger a rally similar to those seen after past regulatory advancements.
The shift in US policy towards embracing digital assets, rather than maintaining uncertainty, could reignite discussions about the US accumulating more Bitcoin for its strategic reserve, especially with Trump's strong backing of the crypto market.
While the market cannot offer guarantees, the current environment, with rebounding on-chain liquidity and favorable macroeconomic conditions leaning towards stimulus, suggests a potential for significant market movement beyond mere consolidation. The BTC price action will be closely watched, as the signals are accumulating and the global attention on the crypto market is undeniable.