- A new report from QCP Capital says central banks in Asia could hold the key for Bitcoin’s price action.
- All eyes are on the U.S. Federal Reserve, given its historical influence on the asset’s price.
- Other factors that could sway Bitcoin’s price include U.S. CPI, Mt Gox’s deadline for creditor payout decision, and the GBTC ETF case against the SEC.
Bitcoin’s climb to its previous highs appears to have run out of steam, but new research predicts that the asset can ride the wave of liquidity from global central banks.
A report by QCP Capital has predicted that BTC’s price can soar even higher if it can leverage the $1 trillion liquidity injected by global central banks. The report titled “The Crypto Circular” noted that central banks led by the Bank of Japan (BoJ) and the People’s Bank of China (PBoC) have injected $1 trillion worth of liquidity in the last three months.
“What this means is that apart from US data and Fed guidance now, which ultimately still holds the highest beta or market moves, we also have to be conscious of BOJ and PBoC liquidity injections,” read the report. “Any reversal of liquidity from these 2 sources would remove the underlying support that BTC has seen this past month.”
Bitcoin attained a 30-day high of $25,134 after spending months trading below the 20,000 mark. In the last 7 days, the asset only managed to achieve a low of $23,460 as the bulls look for momentum to surge even higher.
QCP Capital says TC is “the most direct global liquidity proxy” because it is not rooted in any central bank worldwide. Historically, Bitcoin has always reacted favourably to liquidity injections, forcing sceptics to wonder how the asset would survive in an era of quantitative tightening (QT) by the Feds.
QCP Capital expects a reduction of the BoJ and PBoC’s liquidity injections in the second quarter of the year in addition to the widely anticipated Fed QT and an increase in terminal rates.
“In that regard, the next 2 BOJ meetings, which will mark the transition of BOJ governors for the first time in 10 years, will take on added importance even for crypto traders,” said QCP Capital. “Along with that, we will be closely watching China’s CPI over the next few months – not as a market-moving event in itself, but as a sign of when the PBoC will be forced to slow down its stimulus.”
Events that could make or mar BTC in 2023
The year is littered with several high-profile events that could send Bitcoin prices on a rally or sink to new lows. In March, the FOMC with projections, China’s CPI report, and the oral arguments between Grayscale and the SEC are worthy events to keep an eye on.
Other events include the Mt Gox expected lump sum payout in September, the monthly U.S. CPI, the anticipated U.S. debt ceiling, and Sam Bankman-Fried’s trial amongst others.