Bitcoin’s price plunged by 17% from 19 500 dollars to 16 200 in 2020. This event became known as “the Bitcoin crash”. “Thanksgiving Day Massacre.” The market is unsure if history will repeat itself this year as the holidays approach.
Bitcoin’s prices dropped by an average of 8% between Monday and Wednesday, from $98,871 a high to $90 791 a low. Analysts have been discussing whether this sudden drop in the BTC rate could repeat history.
Bitcoin ‘Thanksgiving Day Massacre’ 2024?
Alex Thorn is the head of research at Galaxy Digital. He took on X to Draw parallels The current market is a good indicator of what will happen in 2020. “Who remembers the Thanksgiving dump of 2020? Bitcoin dumped 17% between Wednesday, Nov 25, and Friday, Nov 27, 2020. BTCUSD later went on to more than 3x over the next 5 months. Does history rhyme?”
The crash may have been triggered by the global M2 money supply. A chart showing the correlation of Bitcoin with global M2 circulates on X.
Joe Consorti is an analyst with Theya. observed Since September 2023 “Bitcoin has closely tracked global M2 with a ~70-day lag.” Over the past two months, global M2 has declined from $108.3 trillion to $104.7 trillion, driven by factors such as a strengthening US dollar—devaluing foreign currency-denominated M2 when converted into dollars—and economic slowdowns dampening lending and deposit creation.
Related Reading
Consorti cautions, “If it continues to follow the current contraction in M2, a 20-25% correction could materialize, potentially pulling bitcoin down to roughly $73,000—not a price prediction, but a stark reminder of Bitcoin’s tether to the global money supply.” Bitcoin, however, could also defy that trend in the future, just as it has done before, especially “from 2022-2023 because of the FTX collapse Interest in the area will disappear as a result.”
The structural aspect of the argument is raised by him. ETF inflows The current deflation of M2 could be helped by corporate purchasing pressure. Consorti concludes, “Either way, a correction at this point seems about right. As mentioned before, these rapid run-ups in Bitcoin’s price always have pitstops along the way, […] it’s vital to understand the asset you hold, the macro environment it exists in, and the forces driving it higher long-term. If you truly understand bitcoin, you don’t panic sell.”
Related Reading
Some analysts, despite the cautious outlook believe that the decline may only be temporary. Jamie Coutts Chief Crypto analyst at Real Vision points out X is a link “a Bitcoin bid has overshadowed tightening liquidity over the past month.” Bitcoin has become a popular cryptocurrency. “overstretched vs. global M2” Coutts explains that, while his model suggests caution when it comes to risky assets, especially leverage, he also highlights the potential for policy changes.
The Federal Reserve, according to Steno’s insights as an economist, is not a good idea. “in effect, discussing a put for USD liquidity—changes to support liquidity developments as early as December.” Coutts concluding: “DXY could have topped here. The lag effect that Fintwit is focused on atm is still real, but ultimately, the Fed is waving the bull flag for risk assets again. Bullish 2025. Bullish BTC.”
BTC was trading at $93,250 as of the time this article went to press.
Featured Image created using DALL.E and chart from TradingView.com
“This article is not financial advice.”
“Always do your own research before making any type of investment.”
“ItsDailyCrypto is not responsible for any activities you perform outside ItsDailyCrypto.”
Source: www.newsbtc.com
