Bitcoin price metric ‘since October’ warns analyst of $10K dip
Bitcoin is on “borrowing time” as global liquidity conditions shift away from crypto and risk assets, a new analysis has warned.
On December 6, Jamie Coutts, chief crypto analyst at Real Vision Investment Company, delivered some unwelcome news for Bitcoin (BTC) bulls.
The lagging BTC price faces a new liquidity crisis.
Bitcoin may make further gains in this bull market, but the next three months may mark a pause for the party. Coutts suggests that liquidity conditions, as outlined in the Bitcoin MSI macro model, could lead to further pain.
“Bitcoin has hit new ATAs in the face of an ever-decreasing liquidity backdrop,” he said.
“1. If the situation worsens, the march, although interesting, can last only for a certain period of time. 2. If the situation becomes easier, it is necessary to go back, but we will go again.
Bitcoin vs. Macro liquid data. Source: Jamie Coutts/X
His findings came in the midst of the BTC/USD flash volatility, which printed a “Darth Maul” candle and quickly wiped out hundreds of millions of dollars in long and short positions with a $10,000 correction.
Source: Tony “Bull” Severino
Coates says the model helped him call both the beginning and the end of the last Bitcoin bear market in 2022.
“The macro and liquidity dashboard shows unmistakably sustained bear momentum for most metrics,” he said alongside liquidity data.
“This is not a time to panic; it's a warning. In these areas, $BTC will post very poor returns.”
In the next two to three months, a stressful business environment could return, Coutts said, adding that Bitcoin's liquidity changes around two months.
“This MSI indicator turned into depression in mid-October, but Trump's election victory (really) triggered a strong rally,” he said.
“Similarly, the model was ultimately weak in February but ETF launches and flows kept BTC up for another month. However, a persistently depressed liquidity backdrop finally took hold (as well as a highly leveraged rally that needed time to clear).
BTC price performance with global liquidity. Source: Jamie Coutts/X
Bitcoin bulls need a weak dollar
An additional consideration comes in the form of the strength of the US dollar.
Related: 4 New BTC Price Targets Will See Bitcoin Over $124k in New Year
The US dollar index (DXY) hit its highest level since November 2022 last month – something Coutts hopes remains a “false crash”.
US Dollar Index (DXY) 1-week chart. Source: Cointelegraph/TradingView
“This to me is a fundamental case for the conditions to ease into Q1 2025,” he said.
However, if it takes that pivot higher we will see a very sharp pullback across all assets. It's not my starting point, but it's something we need to be very aware of.”
BTC/USD 1-Hour Chart. Source: Cointelegraph/TradingView
BTC/USD was trading around $98,000 at the time of writing on December 6, according to data from Cointelegraph Markets Pro and TradingView.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
