Bitcoin has been experiencing stagnant trading over the past few months, lacking significant upward or downward movements. This is unusual compared to previous cycles where the cryptocurrency saw substantial growth during times of ample liquidity and high investor risk appetite. However, despite a slight rise in global liquidity benefiting Bitcoin, market expectations for interest rate cuts have decreased, leading to normal levels in the year-on-year change in M2.
Supply and Demand Dynamics
On the supply side, selling pressure has lessened with long-term holders experiencing price stability around $60k and short-term holders reducing sales due to decreased profitability. While there is a lack of immediate signs indicating a surge in demand, market conditions suggest the potential for a more significant rally within this cycle. It is likely that Bitcoin will continue to trade within its current range until triggers emerge that can prompt a decisive change.
Predictions for the Future
Analysts, including those at CryptoQuant and Galaxy Digital, anticipate that Bitcoin will remain within its trading range until a more favorable macroeconomic environment arises, possibly following the first anticipated US interest rate cut in September. This event could ignite a new wave of demand and subsequent rally, potentially marking the peak of the current cycle. Mike Novogratz from Galaxy Digital suggests that Bitcoin’s price will likely fluctuate between $55,000 and $75,000 until the Fed makes its rate cut decision.
While Bitcoin is currently facing a period of stagnant trading, there is optimism for a potential rally in the near future. The supply side dynamics, along with market conditions such as profitability, leverage, and the distribution of coin ages, all point towards a possible uptrend within this cycle. Investors should closely monitor macroeconomic events, particularly the anticipated US interest rate cut in September, as it could be a significant catalyst for a price surge in the cryptocurrency market.
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