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Swissblock, a prominent firm in cryptocurrency analysis, has revealed that Bitcoin‘s Fundamental Index (BFI) is showing signs of a positive trend, indicating a potential market bottom. This index is derived from the interplay between liquidity and network expansion, which are crucial for attracting new participants to the Bitcoin market.
What Does Bitcoin’s Fundamental Index Indicate?
In a recent update shared on X, Swissblock emphasized that the upward movement of Bitcoin’s BFI points toward an increase in market liquidity. This rise in liquidity, coupled with the expanding Bitcoin network, serves as a significant indicator for market health.
Swissblock stated, “Bitcoin is marking the current bottom. The market’s bottom formation process is nearing its final stage, after which a sudden rise is expected. The BFI clearly summarizes upcoming developments.”
Current liquidity levels are approximately 44, with expectations that surpassing the 50 mark could trigger a notable upward shift in the market’s direction, providing a strong signal for those looking to reinvest.
Swissblock remarked, “Once liquidity exceeds the 50 level, a sudden increase will begin.”
Will Increased Liquidity Attract New Participants?
Furthermore, Swissblock observed that Bitcoin’s recovery mirrors the growth in the M2 money supply, suggesting a correlation that may lead to a long-term rebound in Bitcoin’s value.
According to Swissblock, “A recovery aligned with M2 growth is observed; Bitcoin is steadily recovering alongside increasing money supply.”
While short-term declines in Bitcoin’s value are anticipated, these fluctuations are unlikely to impact its long-term trajectory significantly. Such dips may create favorable entry points for new market participants while also providing opportunities to balance futures trades.
The ongoing surge in liquidity and growing interest from market participants is fostering optimism for Bitcoin’s future. However, the likelihood of short-term volatility remains, emphasizing the need for careful monitoring and prudent decision-making among market players.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
