Bitcoin has hit bottom. Now it can only go up.
That’s according to analysts David Brickell and Chris Mills. In their Connecting the Dots newsletter on Sunday, they said that in “this past week, we believe we’ve seen the ‘peak’ in US liquidity conditions tightening.”
The London Crypto Club analysts see the moment as “marking a local bottom,” and predict that a surge in liquidity over the coming weeks will see Bitcoin “reconnect to the broader risk picture” and “retest record highs.”
The bullish call comes as Bitcoin’s price dropped about 3% on Monday morning, trading at just over $107,000. The dip comes on the back of traders on Bitcoin exchange-traded funds selling $800 million worth of their assets last week, DefiLlama data shows.
But with $3.4 billion in ETF inflows still logged in October, Brickell and Mills expect the world’s largest crypto to retest record highs in the coming months.
Fed pivot
Short-term uncertainty around Federal Reserve policy weighs on the market, Brickell and Mills said, but the broader trend points to more liquidity and renewed momentum for risk assets.
“The Fed also announced an end to quantitative tightening from December 1,” they wrote. “That is, after November, the Fed’s balance sheet will no longer be contracting by allowing maturing Treasury holdings to run off.”
“That’s the end of the liquidity drain,” they added. “From there, the Fed’s balance sheet will start rising again, providing the kind of environment in which Bitcoin historically thrives.”
They expect liquidity to ease further once the US federal government shutdown ends, freeing up Treasury Department spending and increasing bank reserves.
Liquidity is “set to change quite significantly” in the next few weeks, the note said. “Bitcoin will reconnect to the broader risk picture and re-test record highs.”
Now, all eyes are on the next Federal Open Market Committee meeting in December.
The CME FedWatch tool puts the chances of another cut in December at 67%.
Cautious optimism
Brickell and Mills are not alone in their managed optimism.
Ryan Chow, CEO of Solv Protocol, a Bitcoin yield platform, told DL News that Bitcoin is “consolidating between $105,000 and $115,000 as markets digest prior gains and await clearer signals from central banks.”
“As ETF flows mature and allocations turn balance-sheet-driven rather than speculative,” Chow said, “volatility should gradually compress, setting the stage for the next structural leg higher.”
Mike Maloney, CEO of blockchain tech company Incyt, told DL News that sentiment has shifted “from exuberance to optimistically cautious,” but the trajectory is clear.
