Bitcoin (BTC) hodlers have to watch the central banks of China and Japan, as well as the United States, as BTC/USD struggles with “huge” resistance.
This was the view of trading firm QCP Capital, who in their latest crypto market research article, “Crypto Circular” warned that Bitcoin faces risks far beyond the Federal Reserve.
Bitcoin “the most direct global liquidity proxy”
Surviving the latest deluge of macroeconomic data from the US, Bitcoin still slips just below $25,000 as bulls run out of momentum.
For QCP Capital, there is now reason to believe that the risk factors for price performance will not only come from the Fed, but also from China and Japan.
Market participants now have to contend with issues such as China’s Consumer Price Index (CPI), as well as the US equivalent, along with policy changes by the Bank of Japan.
“While the jury is out on BTC’s value as an inflation hedge, it cannot be denied that it is the most direct global proxy for liquidity as it is not tied to any central bank or nation,” the research claims.
Bitcoin is sensitive to global liquidity, and when central banks inject it, that in itself provides an incentive for growth. That argument is already popularand others also watched as “liquidity junkie“Bitcoin will go through central bank liquidity changes this year.
“And while we focused on USD liquidity – from QT and the Fed’s reserve balance, we missed the massive injection of liquidity from the Bank of Japan (BOJ) and the People’s Bank of China (PBOC) over the past 3 months,” QCP continues.
“Contrary to consensus, central banks have added a net $1 trillion in liquidity since the October 2022 market bottom, with the PBOC and BOJ the biggest contributors.”
The QCP refers to the dichotomy between US and China-Japan policy – quantitative tightening (QT) versus quantitative easing (QE). No matter what the Fed does, additional liquidity in one place is guaranteed to go into risky assets like cryptocurrencies.
“So such a large injection of liquidity will undoubtedly find its way into cryptocurrencies, despite what appears to be the current US administration’s best efforts to prevent it,” he says.
Against $1 trillion in net liquidity injections, the Fed cut its own balance sheet to the lowest level since September 2021.
“This means that in addition to US data and Fed guidance, which ultimately still hold the highest beta for market moves, we also need to be aware of BOJ and PBOC liquidity injections,” QCP writes.
“Any reversal of liquidity from these 2 sources would remove the underlying support BTC experienced last month.”
The research reiterates the “double peak” warning.
Going forward, however, liquidity fans face huge resistance when it comes to Bitcoin, with order books showing sellers are waiting. in bulk approaching $30,000.
Related: Can Bitcoin Price Hold $24K As Stock Correlation Is At Its Lowest Since 2021?
$25,000 is already causing enough trouble, QCP warns, acknowledging that a rejection at that level would mean resistance remains in check from mid-2022.
Like Cointelegraph reportedpopular trader and analyst Rekt Capital is also following this issue.
#BTC is pulled back to retest
The confluent area must be held below for the retest to be successful$BTC #Crypto #Bitcoin https://t.co/ISYqnU5bkY pic.twitter.com/Vx2eV3fLDA
— Rekt Capital (@rektcapital) February 22, 2023
“BTC – Potential double top forming against August 2022 correction high and May 2022 reaction low at 25,300. Above that we have huge resistance at 28,800-30,000 which is a head and shoulders neckline,” the research confirms.
According to data from Cointelegraph Markets Pro and TradingView.
The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
