Key Takeaways
Why might Bitcoin’s momentum remain limited?
Global liquidity is rising, driving capital toward safer assets like banks, while institutional investors paused BTC accumulation.
What factors are supporting Bitcoin’s short-term rally?
Long-term holders are accumulating BTC, while the Fed’s 25 bps rate cut acts as a bullish catalyst for Bitcoin.
Bitcoin [BTC] continued its rally in the past day, with the asset closing above $117,000 on the chart.
Though this close coincided with rising global liquidity, it might be unfavorable for the asset. AMBCrypto paints a clear picture of what is happening.
Global liquidity rises — Negative for Bitcoin
There has been a surge in global liquidity over the past day, according to from Alphractal. Ideally, this should imply that assets, including Bitcoin, should rise as more capital flows into the global market.
However, the current scenario is not entirely positive for Bitcoin. A rise in global liquidity often results in stronger inflows into banks, while Bitcoin tends to drop—a pattern that has persisted since 2022.
At press time, bank liquidity was at $30.4 trillion, while the global money supply (M2) was at $128.1 trillion, with both continuing to rise.
This suggested that capital flowing into Bitcoin, a known risk asset, could remain limited as more investors allocated funds into safer asset classes.
AMBCrypto also examined how institutional investors are behaving, finding their actions in line with global liquidity trends.
