The current remaining bearish factors are few, and we can focus on the potentially positive news coming on March 7.

Author: Crypto Stream

Compiled by: Tim, PANews

Is now the best time to buy Bitcoin at the bottom?

The market plummeted 10% overnight, completely offsetting the upward effect of the U.S. cryptocurrency strategic reserve. Retail investors are panic selling, and market sentiment has dropped to a freezing point. However, the actual situation may be better than it appears. Here are my market views:

Why can the global M2 money supply drive Bitcoin up?

Bitcoin is extremely sensitive to changes in the global money supply. As the "most sensitive asset" to liquidity changes (a term coined by the global liquidity research institution CrossBorder Capital), experts estimate its correlation with the money supply to be as high as 40%.

Analysis of the current trend of M2 money supply:

The M2 supply completed its bottoming around January this year. Historical data shows that the impact of M2 on Bitcoin prices has a lag effect of 40-70 days. This means that the liquidity from its bottoming recovery is likely to drive Bitcoin up in the medium term, with this transmission mechanism potentially showing effects as soon as 20 days later.

Analysis of the impact of tariff policies on the market

The panic from the trade war is impacting the market, and the decline in U.S. risk appetite poses significant bearish pressure on risk assets. However, I believe the impact of tariffs has been fully digested by the market, with the primary verification indicator being ETF fund flows:

ETF fund flows and changes in market expectations

Currently, ETF fund outflows have significantly slowed, and institutional investors have basically completed pricing in the impact of tariffs last week. It is expected that there will not be a larger scale of fund withdrawal this week. Notably, there are signs of inflows from buying on dips in the market.

Analysis of the selling crowd

The current selling pressure mainly comes from two groups: first, retail investors panic selling, and second, institutional players who were prepared in advance. It is worth noting that the retail group may have a misjudgment expectation regarding policy delays.

Technical analysis of the CME futures gap

Another potential bearish factor is the CME Bitcoin futures gap. This phenomenon refers to the gap that forms between the Bitcoin spot price and the futures opening price after the CME exchange closes for the weekend. Although the gap does not necessarily trigger immediate selling, the prevalent trader psychology of "gaps must be filled" can exacerbate short-term selling pressure. It is noteworthy that this technical gap was filled on March 4, eliminating this influencing factor from the current price equation.

Based on the above analysis, we can summarize the three core driving factors that led to yesterday's price fluctuations:

• Insiders shorting after the announcement

• Long positions being forcibly liquidated

• A large influx of newly opened short positions

Finally, I believe that the remaining bearish factors are few, and we can focus on the potentially positive news coming on March 7.

The BTC price has fallen back to the level before the announcement, and I believe that buying at the current price offers an excellent risk-reward ratio.

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