Bitcoin is in a “perfect” setup from a macroeconomic perspective, but upcoming liquidations worth more than $500 million threaten to create more volatility for the world’s first cryptocurrency.
According to Jamie Coutts – chief analyst at Real Vision, regarding the global M2 money supply, Bitcoin’s current mid-cycle correction suggests it is about to breakout to the upside.
Coutts wrote in an X post on August 13:
“Over the past decade, Bitcoin has tended to bottom a few months before global M2 bottoms. The pattern then breaks down, preceded by liquidity volatility and a mid-cycle correction.”
BTC/M2 money supply | Source: Jamie Coutts
The growing global liquidity from M2 money supply, combined with spot Bitcoin ETFs, creates the “perfect setup” for Bitcoin, the analyst added.
The analysis comes as Bitcoin recovers from last week’s $510 billion cryptocurrency market sell-off, which sent prices plunging to a five-month low of $49,500 on Aug. 5. Bitcoin remains below the key psychological mark of $60,000.
Nearly $500 million is about to be liquidated
Despite the bullish macroeconomic outlook, Bitcoin could still correct towards the $55,000 mark.
According to Coinglass data, a potential move below $58,000 would liquidate $489 million worth of cumulative leveraged short positions across all exchanges.
Bitcoin Liquidation Map on Exchanges | Source: Coinglass
Cumulative Bitcoin Short Liquidations Will Surpass $800 Million If Price Drops Below $57,500.
Can Bitcoin Break Two-Week Downtrend?
Bitcoin has yet to break out of its two-week downtrend, which began on July 28.
According to popular analyst Rekt Capital in an August 12 X post, a successful retest of this downtrend line would generate further bullish momentum:
“Over time, downtrends represent lower prices, meaning retest attempts will result in lower prices and still be successful. The key here is to continue the trend. Bitcoin needs to have strong buying volume when retesting the downtrend.”
BTC 1-day chart | Source: Rekt Capital
Other analysts are eyeing the possibility of Bitcoin correcting to $55,000 before it can gain further momentum.
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