Thomas Daniels
In the absence of a clear market catalyst, recent analysis from Matrixport suggests that the price trend of Bitcoin may continue to be range-bound. Although Bitcoin rallies and liquidity expansion have historically occurred at the same time, commentators are now doubting the reliability and strength of this relationship.
Although central bank-driven liquidity expansion frequently finds its way into digital asset markets, Matrixport analysts stressed in a March 28 post on X (previously Twitter) that this does not always translate into sustained upward momentum for Bitcoin.
“The frequently mentioned 13-week correlation lacks a robust theoretical framework, despite the fact that a time lag between monetary supply increases and Bitcoin price movements is observable,” the experts said.
They also issued a warning that drawing false conclusions from comparing the fluctuations of Bitcoin’s price to measures of global liquidity could be deceptive. Due to the fact that both variables are non-stationary and naturally trend over time, conventional correlation analysis may yield inaccurate findings.
Bitcoin might keep consolidating if there isn’t a significant macroeconomic or crypto-native event. According to Matrixport, Bitcoin has mostly gone sideways, with the exception of occasional volatility around occasions like the 2024 U.S. presidential election. According to the paper, changes unique to cryptocurrencies and more general economic policies may provide more accurate recommendations for future price movement, even though some market participants still consider liquidity indicators to be predictive tools.
