In simpler terms, Bitcoin could experience temporary stress due to increasing financial constraints worldwide after Trump’s re-election, which might lead to a possible halt in its price growth, according to some financial experts.
Investors in cryptocurrencies might want to prepare for a temporary decrease in activity since worldwide liquidity is becoming restricted, according to the insights shared by Matrixport, a significant hub for blockchain analysis based in Asia, on January 8th.
Based on insights from crypto expert Markus Thielen, the recent tightening of market conditions may be due to a strengthened U.S. dollar following President Trump’s re-election. Historically, changes in global liquidity have an impact on Bitcoin’s (BTC) price around 13 weeks later. As liquidity decreases, Bitcoin might enter a period of consolidation, according to Thielen, who typically sees this happening when the supply of dollar-denominated liquidity weakens. However, despite the current dip, the analyst anticipates this phase to be temporary.
According to Thielen, the overall perspective for investments like Bitcoin, often referred to as risk assets, appears optimistic. He cautions that traders might exercise more caution during periods when liquidity indicators aren’t favorable, as they’ve been useful predictors in the past. For now, Bitcoin may encounter some obstacles, but the big picture continues to look promising.
The cautionary message arises following a significant decrease in investments into Bitcoin ETFs that trade on the stock market, which occurred on January 7th. This drop can be attributed to Bitcoin’s decline by 5% as investors anticipate a more aggressive monetary policy from the Federal Reserve, signaling higher interest rates and potentially lower demand for Bitcoin.
According to crypto.news’s earlier report, Bitcoin (BTC) dipped approximately 6% on January 7th due to increasing U.S. bond yields and cautious investor sentiment before crucial economic announcements. The increase in bond yields has fueled anticipation of a more aggressive policy from the Federal Reserve, as officials hinted at only two interest rate reductions in 2025 – less than what was previously expected.
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2025-01-08 13:31