Bitcoin price drop to $72K possible due to ‘macro liquidity’ conditions — Analyst

After a positive start to the week, Bitcoin price reverted to negative returns after BTC (BTC) dropped 3.5% to an intraday low of $84,120 on March 28. The price rejection occurred at the cusp of the descending trendline (black) and the upper range of the ascending channel pattern.

Bitcoin 1-day chart. Source: Cointelegraph/TradingView

On the daily chart, BTC is currently below the 200-day exponential moving average (EMA) again, and a potential close below the key indicator might trigger further downside.

  

Global liquidity expansion could help Bitcoin price

Recent analysis from macroeconomic market analyst Capital Flows pointed out that Bitcoin could correct to the $72,000-$75,000 region if liquidity conditions remain unchanged. 

Macro liquidity refers to the total capital available in the financial system that can easily flow into risk-on assets like equities and crypto but is influenced by factors like interest rates, US Federal Reserve policies and market conditions.

According to Capital Flows, Bitcoin is exhibiting a “greater convergence” with traditional risk assets, but it remains at the periphery of the risk curve. This implies that for capital to flow back into BTC, investors’ mindset must shift from focusing on less risky assets, such as bonds, to riskier assets like BTC or low-quality banks in the Russell index. The researcher said, 

“Broadly speaking right now, the macro liquidity backdrop is neutral. Rates have come down marginally, but the carry trade continues to create risk for assets.”

On the contrary, other analysts have pointed out that the rise of the Global M2 money supply could potentially trigger a BTC rally. The Global Liquidity chart, which monitors M2 growth from major central banks, has historically formed a correlation with Bitcoin's price movements.

Bitcoin and Global M2 Money supply correlation. Source: X.com

Colin Talks Crypto, a crypto commentator, said that the predictive correlation between M2 supply and BTC indicates a BTC rally around May 1, which might last two months.

However, the key difference between macro liquidity and global M2 growth is that while M2 measures total money supply, macro liquidity highlights the ease at which capital can flow into risk assets. For context, even if the M2 money supply rises, macro liquidity might remain the same if the money is allocated to low-risk assets. In light of that, Capital Flows said, 

“The quantity of money in the system isn’t expanding like it used to.”

Related: Why is Bitcoin price down today?

Bitcoin fills sub-$85K CME gap

Bitcoin’s recent rally created a CME gap between $84,435 and $85,000. The CME Bitcoin futures gap indicates the difference between the closing price of BTC CME futures on Friday and the opening price on Sunday evening. The gaps get filled most of the time, and traders approach these levels from the point of resistance or support, depending on the market structure. 

Bitcoin CME gap chart. Source: Cointelegraph/TradingView

As illustrated in the chart, BTC price filled the CME gap before its daily close on March 28, which can lead to a short-term bounce. The CME gap is also aligned with a retest of the lower range of the ongoing ascending channel pattern, as mentioned earlier. 

However, crypto trader HTL-NL pointed out the possibility of a long-term correction below, forming new lows in 2025. The trader showed immediate support at $76,700, which might be a minor retest region before prices drop below $74,000. 

Likewise, Crypto Chase, a technical analyst, noted that it is a “do or die” situation for Bitcoin. In an X post, the trader said, 

“Either holds this FVG / 2 weeks ago high at 8527,0 or it fails, and I'll look for a short on retest targeting build up liq near 80K.”

Bitcoin 1-day analysis by Crypto Chase. Source: X.com

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.