BTCcatch the bottomIs the opportunity here? Let the data chart speak

Author: Crypto Stream

Translated by: Tim, PANews

Is now the best time to bottom out Bitcoin?

The market plummeted 10% overnight, completely offsetting the rise in the US strategic reserve of cryptocurrencies. Retail investors are panic selling, and market sentiment has dropped to freezing point. But the actual situation may be better than it appears, here are my market views:

Why can the global M2 money supply drive Bitcoin up?

Bitcoin is extremely sensitive to changes in the global money supply. As the ‘most sensitive asset’ to liquidity changes (a term coined by the global liquidity research firm CrossBorder Capital), experts estimate its correlation with the money supply to be as high as 40%.

Analysis of the current trend of M2 money supply:

M2 supply has bottomed out around January this year. Historical data shows that there is a 40-70 day lag effect of M2 on Bitcoin prices. This means that its bottoming out and rebounding liquidity will likely drive Bitcoin’s rise in the medium term, with this transmission mechanism possibly taking effect as early as 20 days later.

Analysis of the Market Impact of Tariff Policies

Trade war panic is impacting the market, the decline in US risk appetite poses a significant bearish sentiment for risk assets. However, I believe that the impact of tariffs has been fully digested by the market, with the primary validation indicator being the ETF fund flow:

Changes in ETF fund flows and market expectations

The current ETF fund outflow has significantly slowed down, and institutional investors have basically priced in the impact of tariffs last week. It is expected that there will not be a larger scale of fund withdrawal this week. It is worth noting that there are signs of buying on dips in the market.

Selling Crowd Analysis

The current selling pressure mainly comes from two groups: one is retail investors who sell in panic, and the other is institutional players who were prepared early. It is worth noting that retail investors may have misjudged expectations for policy delays.

Technical Analysis of CME Futures Gaps

Another potential bearish factor is the CME Bitcoin futures gap. This phenomenon refers to the gap formed between the Bitcoin spot price and the futures opening price when the CME exchange is closed over the weekend. Although the gap does not necessarily trigger immediate selling, the common psychological expectation among traders that ‘gaps will be filled’ will intensify short-term selling pressure. It is worth noting that the technical gap was filled on March 4th, and this factor has been eliminated from the current price equation.

Based on the above analysis, we can summarize the 3 core driving factors that led to yesterday’s price fluctuations:

Insiders shorted after the announcement was made.

Long positions are forcibly liquidated

A large number of newly opened short positions poured in

Finally, I think there are not many negative factors left at the moment, and we can focus on the positive news that may come on March 7th.

The BTC price has fallen back to the level before the announcement was made, and I believe that buying at the current price has an excellent risk-reward ratio.