Fidelity Warns Bitcoin May Need Rebalancing Amid Gold’s Surge

TLDR

• Jurrien Timmer from Fidelity questions whether Bitcoin’s recent surge to $95K signals a return to an uptrend or a countertrend bounce.
• Timmer points out that Bitcoin’s momentum curve is an extreme outlier compared to historical trends, suggesting a potential market rebalancing.
• Fidelity highlights the significant drop in Bitcoin futures interest and cooling inflows into Bitcoin ETFs as signs of institutional exhaustion.
• Timmer compares Bitcoin’s performance with gold, which continues to rise as a reliable hedge against global monetary expansion.
• The growing global money supply of $116.5 trillion may be affecting Bitcoin’s performance, while gold remains a stable investment.

Jurrien Timmer, Fidelity’s Director of Global Macro, has raised concerns about Bitcoin’s recent rally to $95,000. He questioned whether this price surge signifies a return to an uptrend or is merely a “countertrend trap.” Timmer’s analysis highlights Bitcoin’s extreme momentum curve and suggests that further rebalancing may be needed before a clear market bottom can be established.

Bitcoin Faces Uncertainty in the Wake of Global Money Supply Growth

Timmer linked Bitcoin’s uncertain trajectory to the growing global money supply, which now stands at $116.5 trillion. This increase, which is expanding at an annual rate of 11.4%, presents a challenge for Bitcoin’s role in the financial landscape. Despite Bitcoin’s rise, Timmer believes its current performance remains ambiguous, especially compared to the consistent growth of other assets.

Gold, in contrast, continues to perform well amid this global expansion. It has maintained its value as a reliable hedge, setting new highs. While Bitcoin struggles, gold is fulfilling its expected role as a store of value, which reinforces its continued appeal to investors.

Bitcoin Price Surge Remains Questionable, Says Timmer

Bitcoin’s rise from $80,000 to $95,000 has raised doubts about the sustainability of this upward movement. Timmer pointed out that the correction might not be over and the current rally could be part of a countertrend bounce. He observed that the cryptocurrency’s recent momentum deviates from historical norms, making the price action more difficult to interpret.

Furthermore, Timmer highlighted key liquidity indicators suggesting that institutional interest in Bitcoin is cooling. Specifically, he mentioned a significant drop in Bitcoin futures interest, which signals a reduction in leverage. He also noted that inflows into Bitcoin exchange-traded funds (ETFs) have slowed, pointing to exhaustion among institutional investors.

Timmer’s analysis draws attention to the discrepancy between Bitcoin and gold, particularly as the latter continues to thrive. While Bitcoin remains volatile, gold has proven to be resilient, providing a stable investment alternative. As a result, more institutional capital may continue to shift toward gold as a safer asset, leaving Bitcoin’s long-term performance uncertain.

The global financial landscape, marked by expanding money supply and fluctuating asset values, calls for a closer evaluation of Bitcoin’s place in the market. Investors must pay attention to liquidity signals and whether Bitcoin can maintain its support at $95,000.