Original Author: Crypto Stream
Original Compilation: Tim, PANews
Is now the best time to buy the dips in BTC?
The market has plummeted 10% overnight, completely offsetting the rise in the US crypto reserve strategy. Retail investors are panic selling, and market sentiment has plummeted to an all-time low. But the actual situation may be better than it appears on the surface. Here are my market views:
Why can the global M2 money supply drive BTC up?
BTC 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 in M2 money supply:
M2 supply has bottomed out around January this year. Historical data shows that the impact of M2 on BTC prices has a 40-70 day lag effect. This means that the recovery of its liquidity will most likely drive a medium-term rise in BTC, and this transmission mechanism could take effect as soon as 20 days.
Analysis of the impact of tariff policies on the market
Trade war panic is impacting the market, and the decline in US risk appetite is having a significant negative impact on risk assets. But I believe the impact of tariffs has been fully digested by the market, and the key indicator to watch is ETF fund flows:
ETF fund flows and changes in market expectations
Current ETF outflows have slowed significantly, and institutional investors have largely priced in the impact of tariffs last week. It is expected that there will be no larger-scale capital withdrawals this week. It is worth noting that there are signs of inflows at low prices.
Analysis of the selling group
The current selling pressure mainly comes from two groups: one is the panic-selling retail investors, and the other is the well-prepared institutional players. It is worth noting that the retail group may have misjudged the expectation of policy delays.
Technical analysis of the CME futures gap
Another potential negative factor is the CME BTC futures gap. This phenomenon refers to the gap that forms between the BTC spot price and the futures opening price when the CME exchange is closed on weekends. Although the gap does not necessarily trigger immediate selling, the widespread "gap must be filled" psychological expectation among traders will exacerbate short-term selling pressure. It is worth noting that this technical gap was filled on March 4, and this factor has been eliminated from the current price equation.
Based on the above analysis, we can summarize the 3 core driving factors behind yesterday's price volatility:
• Insiders short after the announcement
• Long positions were forcibly liquidated
• A large influx of new short positions
Finally, I believe that the remaining negative factors are not many, and we can focus our attention on the potential positive news that may come on March 7.
BTC price has fallen back to the level before the announcement, and I believe the current price level has an excellent risk-reward ratio for buying.
