Will Bitcoin See Another ‘Thanksgiving Day Massacre’? Experts Weigh In

4 months ago

Almost 4 years agone to the day, Bitcoin experienced a melodramatic 17% plunge from $19,500 to $16,200 successful 2020, an lawsuit that became infamously known arsenic the “Thanksgiving Day Massacre.” As the vacation approaches erstwhile again, marketplace participants are questioning whether past mightiness repetition itself.

On Monday and Tuesday, Bitcoin’s terms underwent an 8% correction, dropping from $98,871 to a debased of $90,791. This abrupt downturn has sparked discussions among analysts if past could beryllium repeating for the BTC price.

Bitcoin ‘Thanksgiving Day Massacre’ 2024?

Alex Thorn, Head of Research astatine Galaxy Digital, took to X to gully parallels betwixt the existent marketplace and the events of 2020. “Who remembers the Thanksgiving dump of 2020? Bitcoin dumped 17% betwixt Wednesday, Nov 25, and Friday, Nov 27, 2020. BTCUSD aboriginal went connected to much than 3x implicit the adjacent 5 months. Does past rhyme?”

A imaginable catalyst for the clang could beryllium the global M2 wealth supply. Currently, a illustration illustrating the correlation betwixt Bitcoin and planetary M2 is circulating connected X.

Joe Consorti, an expert astatine Theya, observed that since September 2023, “Bitcoin has intimately tracked planetary M2 with a ~70-day lag.” Over the past 2 months, planetary M2 has declined from $108.3 trillion to $104.7 trillion, driven by factors specified arsenic a strengthening US dollar—devaluing overseas currency-denominated M2 erstwhile converted into dollars—and economical slowdowns dampening lending and deposit creation.

Consorti cautions, “If it continues to travel the existent contraction successful M2, a 20-25% correction could materialize, perchance pulling bitcoin down to astir $73,000—not a terms prediction, but a stark reminder of Bitcoin’s tether to the planetary wealth supply.” However, helium besides acknowledged that Bitcoin mightiness defy this trend, arsenic it has successful the past, peculiarly “from 2022-2023 owed to the FTX collapse and involvement successful the abstraction evaporating arsenic a result.”

He suggests that structural ETF inflows and firm buying unit could assistance Bitcoin defy the existent M2 deflation. Consorti concludes, “Either way, a correction astatine this constituent seems astir right. As mentioned before, these accelerated run-ups successful Bitcoin’s terms ever person pitstops on the way, […] it’s captious to recognize the plus you hold, the macro situation it exists in, and the forces driving it higher long-term. If you genuinely recognize bitcoin, you don’t panic sell.”

Despite the cautious outlook, immoderate analysts judge the dip whitethorn beryllium short-lived. Jamie Coutts, Chief Crypto Analyst astatine Real Vision, points out via X that “a Bitcoin bid has overshadowed tightening liquidity implicit the past month.” While acknowledging that Bitcoin appears “overstretched vs. planetary M2” and that his liquidity exemplary suggested caution, particularly with leverage, Coutts highlights imaginable argumentation shifts that could favour hazard assets.

He references insights from economist Andreas Steno, indicating that the Federal Reserve is “in effect, discussing a enactment for USD liquidity—changes to enactment liquidity developments arsenic aboriginal arsenic December.” Coutts concludes: “DXY could person topped here. The lag effect that Fintwit is focused connected atm is inactive real, but ultimately, the Fed is waving the bull emblem for hazard assets again. Bullish 2025. Bullish BTC.”