Bitcoin's Bull Run: A Tale of Government Shutdown and Liquidity Crisis
The recent decline in Bitcoin's price, dropping nearly 19% from its October peak, has sparked a debate among analysts. Many attribute this decline to a significant factor: the U.S. government shutdown and its impact on market liquidity.
But here's where it gets controversial: the shutdown, which has lasted nearly as long as the country's longest-ever shutdown, has caused a liquidity crisis by removing a substantial amount of cash from the private financial system. This cash, held in the Treasury General Account (TGA), is no longer available for lending or investment, creating a strain on the market.
And this is the part most people miss: the Standard Repo Facility (SRF), a tool used by the Fed, has seen record-high usage, indicating a shortage of cash among banks and financial institutions. This further exacerbates the liquidity issue.
However, BitMEX analysts remain optimistic. They believe that when the shutdown ends, and hundreds of billions of dollars are injected back into the markets, Bitcoin will experience a strong relief rally. This event could potentially align with Bitcoin's historical end-of-year strength, suggesting that the 4-year cycle may not be over yet.
The current turmoil is seen as evidence that Bitcoin's latest cycle is not yet complete. Analysts have been predicting the end of this cycle for months, often citing the unprecedented events of 2024: the approval of U.S. spot Bitcoin ETFs and the fourth halving.
In the past, Bitcoin has typically set new all-time highs after its halving events, followed by a significant drop of 70-80% in the subsequent year. This pattern has led some to believe that the current market correction is a result of a "perfect storm" of Bitcoin's 4-year cycle and the macro-liquidity crisis.
The analysts also point to signs that the bull run was coming to an end, with profit-taking from long-term holders in recent months.
So, is this the end of Bitcoin's lengthy bull run, or just a temporary setback? The impact of the government shutdown and its resolution will undoubtedly play a crucial role in shaping Bitcoin's future. What do you think? Feel free to share your thoughts and predictions in the comments!
