Bitcoin Price May Fall Further Amid Liquidity Squeeze and Sentiment Collapse

Bitcoin prices have pulled back roughly 40% to 50% from their recent highs since early October, mirroring the magnitude of decline seen during the systemic crisis of 2022. However, Sygnum Bank Chief Investment Officer Fabian Dori believes that while Bitcoin may fall further in the near term due to a liquidity squeeze and fractured investor sentiment, the structural foundation remains intact.

Dori notes that volatility will remain high in the short term, with prices potentially going lower from here. He attributes this to 'Extreme Fear' levels of the Fear and Greed indicators, which require a clear catalyst to restore confidence.

A key driver of pressure is the U.S. Treasury's issuance of bills and notes since June last year, which has drawn liquidity out of markets and parked it in the Treasury General Account at the Federal Reserve. Dori describes these assets as 'non-productive.'