Jurrien Timmer, Fidelity’s director of global macro, has questioned whether Bitcoin’s bounce to $95,000 is a return to trend or a "countertrend" trap.
The executive has warned that the "huge outlier" status of Bitcoin’s momentum curve may signal that further rebalancing is required before a true bottom is established.
In a Friday market update, Timmer compared the underwhelming performance of the world’s largest digital asset to the robust performance of gold. The latter continues to set new highs as a reliable hedge against global monetary expansion.
The $116 trillion benchmarks
Timmer’s analysis begins with the "ever-expanding" global money supply, which currently sits at a staggering $116.5 trillion and is growing at an annualized rate of 11.4%.
According to the Fidelity executive, gold is doing exactly what it is designed to do in this environment: "Gold has continued to perform extremely well amid this evolving global world order," Timmer noted.
However, the signal for Bitcoin is far less clear. The cryptocurrency corrected sharply and then rallied from $80,000 to the $95,000 range.
"It’s hard to know whether the correction is over and the uptrend is resuming, or whether the rally from $80k to $95k is a countertrend bounce," Timmer wrote.
Timmer pointed to two critical liquidity metrics that suggest institutional exhaustion. First, futures interest has "dropped substantially," meaning that leverage is leaving the system. Moreover, inflows into spot Bitcoin ETFs have cooled substantially.
The momentum outliner
Perhaps the most bearish note in Timmer’s assessment is his view of Bitcoin’s "momentum curve." He described the asset’s recent price velocity as a "huge outlier" compared to historical norms and other asset classes.
"Perhaps some rebalancing is in order here as well," Timmer concluded.
Timmer’s analysis offers a sobering reality check for some bulls who believe that the worst is already over.
Alex Dovbnya
Caroline Amosun
Denys Serhiichuk