Bitcoin's $150,000 Target Hinges on Global Liquidity

Bitcoin is poised for a potential surge, but its bullish momentum is contingent on a delicate macroeconomic balance, according to trader Josh Olszewicz. In his June 16 update, Olszewicz presented a comprehensive technical and macroeconomic analysis, highlighting that Bitcoin's resilience near all-time highs is underpinned by a single, critical macro factor: liquidity.

Olszewicz noted that despite the absence of rate cuts from the Federal Reserve, risk assets, including cryptocurrencies, continue to rally. He attributed this resilience to the quiet resurgence of global liquidity. Key indicators such as reverse repo operations and the Treasury General Account (TGA) are trending positively, providing the necessary liquidity to keep risk assets buoyant.

Olszewicz emphasized that the current macroeconomic environment differs significantly from the hard tightening regimes of 2018 or 2022. Globally, rate hike cycles are easing or reversing, which has contributed to the increase in liquidity. He warned that if liquidity falls or rates go up, crypto markets could face significant challenges.

Technically, Bitcoin has shown resilience, resisting meaningful breakdowns and reclaiming key levels. Olszewicz identified $97,980 as a crucial downside level to watch, while on the upside, he sees potential for Bitcoin to reach $122,000 as an interim target and eventually settle around $150,000 if the bullish trend continues.

However, the path to $150,000 is fraught with uncertainties. Olszewicz highlighted US liquidity as a wildcard, noting that it is rising modestly but not impressively. He warned that if liquidity stalls or reverses due to unexpected Fed tightening, a jump in TGA balances, or reactivation of reverse repo drains, the entire crypto rally could be at risk.

August is identified as a critical juncture, with a potential US debt ceiling crunch looming. Olszewicz advised paying close attention to developments leading up to August, as higher debt and deficits could drive investors towards fixed supply assets, benefiting crypto markets.

Inflation stability remains a key factor. While independent trackers show "true inflation" hovering in the low 2s, Fed-preferred metrics like CPI and PCE are volatile. For the Federal Reserve to act, sustained, flatline 2% inflation data over three to six months is necessary. Until then, the Fed is likely to maintain its current stance, but market psychology may shift towards viewing easing as a bonus rather than a prerequisite for Bitcoin's momentum.

Olszewicz concluded that if liquidity holds, $150,000 for Bitcoin is still a realistic target. However, if liquidity snaps, the entire cycle could be jeopardized. At the time of reporting, Bitcoin was trading at $105,325.