Bitcoin Regains $25,000 on Hopes China’s Record Easing Will Boost BTC Price

Bitcoin (BTC) spent another day tackling $25,000 on Feb. 20 as analysts continued to warn of market manipulation.

BTC/USD 1 hour candle chart (Bitstamp). Source: Trading View

Bitcoin backed by “Notorious BID”

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD catching up on losses around the weekly close to approach the $25,000 mark again at the time of writing.

However, the bulls remained unable to trigger a reversal of resistance and support, and whale activity on the exchanges kept suspicion high.

In its latest update, the Resource Materials Indicator Watch revealed that high-volume traders were artificially “lowering” resistance overhead, making it more likely that BTC/USD would rise.

Co-founder Keith Alan reference a wall of market liquidity supporting the spot price, what he called the “Notorious BID”

“Multiple rejections from $25,000 correlates perfectly with the TA BTC macro, which is a valid reason for TP at these levels, but Notorious BID is still trying to push prices higher,” a tweet said.

“Based on history and the potential for an upside illiquidity rip, I’m still scalping buys.”

Material indicators added“From a TA perspective, this should be a local top, but Notorious BID still manages the binance backlog.”

“They are distributing BTC demand liquidity across the $25,000-$25,500 range in the active trading zone so resistance is thinning,” part of the comments also read.

A potential plan among these traders could be to trigger a sharp price rally, causing retail investors to huddle or hang in there long, then get stuck as whales dispense BTC into the market at higher levels.

BTC/USD order book data (Binance). Source: Keith Alan/Twitter

China Could Boost ‘Liquidity Addicted’ Crypto

With US markets closed for a holiday, one analyst turned to the longer-term implications of moves out of China.

Related: A $20,000 “Throwback”? 5 things to know about Bitcoin this week

In addition to potentially allowing Hong Kong retail investors access to previously banned crypto, China’s central bank injected a record $92 billion of liquidity into the economy on February 17.

“While most analysts are focused on how Fed tightening will reprice risk assets this cycle, they don’t account for the extent of the easing in the East,” popular Twitter account Tedtalksmacro argued in a thread.

He explained that unlike the US, where the Fed withdraws liquidity via quantitative tightening (QT), China is doing the opposite. In 2020, under the Fed’s COVID-19 quantitative easing (QE), risky assets, including crypto, had an 18-month bull run.

“Crypto is not tied to any particular economy or entity, but rather is a liquidity junkie – it craves for the risk-hungry investor to get money and bet on the fastest horse. This is exactly what will happen this year in China,” the thread continued.

As Cointelegraph reported, US liquidity is already a major talking point when it comes to the performance of crypto assets, with Arthur Hayes, former CEO of derivatives giant BitMEX, predicting that the decline will continue in the second half of 2023.

“Of course, not all the cash injected by the PBoC (People’s Bank of China) will end up in risky assets. But I’d bet a decent part of it will be! Tedtalksmacro nevertheless concluded.

“Just as we have seen from the West in 2020, increased central bank liquidity = prices of risky assets (like BTC) are rising.”

Annotated graph of BTC/USD liquidity versus US liquidity. Source: Tedtalksmacro/Twitter

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Leave a Comment