Liquidity Injection Revives Markets

20.02.23 03:30 AM By Stormrake

There is a new narrative emerging amongst global investors as many are wondering who will be the first to bring in the new liquidity fortunes. This has set in motion an East vs West divide and those who are trying to be early are positioning their bets accordingly.

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

PBoC Provides Relief

The Chinese Central Bank has provided its single largest liquidity injection on Friday to help its embattled economy. This is unlikely to trigger a global loosening of monetary policy but has caused investors, particularly in the digital asset space to edge towards Chinese assets. This is a precarious trade to say the least as it's built on the narrative that Chinese investors will start bidding on certain assets. What has happened now is a reflexive loop where both Eastern and Western investors are bidding on the same assets in anticipation of the other.

Bitcoin: Supply In Profit

The recent surge in Bitcoin price has lifted the circulating supply of Bitcoins in profit to nearly 75% and if current trends continue, can provide a signal for more bullish price action. It's important to note that this particular indicator lags behind price but it can assist in identifying if holders are more or less in profit. As it climbs though it invites sellers to come in as their positions are no longer underwater, when used with that lens traders can extrapolate the data and use it as a form of leading data.

BTC/USD Key Levels

Interactive chart: click on image for higher resolution

Bitcoin has hit a major sell wall at $25,000 USD as traders and investors alike rush to realise profits in a low liquidity environment. The current key level to watch is $24,425 for should it break to the upside, a retest of $25,000 will be up next. Should there be enough momentum for a break and close above $25,000 watch for a sharp move to $27,200 before the markets take a breather. To the downside, if we lose $24,000 then watch for a retest of $23,000. If the pullback is sustained, major support will come in at $22,400 before end of week.

ETH/USD Key Levels

Ethereum continues to chop around its key level of $1,661 USD. For a breakout to the upside to occur we need to see a close above $1,748, once that is secured on a daily timeframe watch for a sharp move towards $1,888. To the downside, if we close below $1,661 then a retest of $1,510 cannot be ruled out. For those who are looking at extreme discounts major support can be found at $1,339 if the sell off continues.

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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