Bitcoin recently recorded its largest weekly drop since August, falling 15% during the third week of December. Analysts have attributed this decline to the global economic squeeze, saying that if the trend continues, it may mean more challenges for Bitcoin’s price.
According to The Kobeissi Letter, the global money supply has shrunk $4.1 trillion in the last two months – a critical economic indicator in which bitcoin usually shadows with a 10-week lag in price action. If this downward trend persists, experts believe Bitcoin could face additional drops.
Joe Consorti from Bitcoin custody firm Theya previously forecasted a 20%-25% correction. His prediction seems to align with recent price movements, suggesting further risks for the cryptocurrency.
Bitwise’s Head of Research, André Dragosch, also anticipates ongoing pressure from tighter U.S. liquidity conditions. However, Dragosch points to a positive internal factor for Bitcoin: its growing illiquid supply. This metric reflects the number of coins held by long-term investors, signaling reduced availability on the market. A supply constrained in such a way may stabilize or even boost Bitcoin’s price, given the right conditions.
At the time of writing, Bitcoin changed hands at around $94,000, down 6% over the weekend. For now, market enthusiasts will be intently focusing on how this benchmark cryptocurrency’s surge in the weeks ahead can be determined with respect to internal and external influences.
