Bitcoin (BTC) and the broader crypto market faced significant declines in early European trading hours on Friday, with BTC dropping 3.2% within 24 hours. Ethereum (ETH) and Solana (SOL) followed suit, plunging 9% and 10%, respectively. Despite the downturn, Han Xu, a partner at HashKey Capital, argues that the crypto bull market may be entering a new mid-phase rather than concluding.
Market Downturn Triggers $1.15 Billion in Liquidations
The dip briefly pushed Bitcoin below $104,000 for the first time in seven days, dragging altcoins like ETH and SOL down with it. This triggered $1.15 billion in crypto futures liquidations. While concerns mount about the bull market’s sustainability, Han remains optimistic, citing "significant upside potential" in this new mid-phase.
Macroeconomic Catalysts for Recovery
Han highlights two key factors that could reignite bullish momentum:
- End of Quantitative Tightening (QT):
The Federal Reserve’s QT program—selling bonds to shrink its balance sheet—reduces liquidity and raises interest rates. Han predicts QT will end by H1 2025, potentially reversing global liquidity conditions.
"Once QT ends, expect real yields to drop sharply, historically correlated with risk-on behavior in crypto markets," Han told FXStreet. - M2 Supply Expansion:
Growing M2 money supply, coupled with potential Supplementary Leverage Ratio (SLR) reforms, may boost market liquidity. SLR adjustments under a Trump administration could further ease regulations, spurring demand for risk assets like Bitcoin.
👉 Why Bitcoin Could Surge Post-QT
Bitcoin’s $1 Million Target: Mathematical or Myth?
Han acknowledges Bitcoin’s $1 million price target seems ambitious but argues it’s grounded in monetary economics:
- Fixed Supply: Bitcoin’s 21 million cap and halving mechanisms mirror gold’s scarcity but with stricter constraints.
- Institutional Adoption: Corporate treasuries (e.g., MicroStrategy) now hold $85.2 billion in BTC, while U.S. spot Bitcoin ETFs have amassed $45.3 billion in net inflows.
Han projects Bitcoin’s market cap could match tradeable gold ($5.6 trillion) within a decade. *"A 15% annual gold growth rate would make Bitcoin’s $1 million target mathematically plausible by 2035,"* he asserts.
FAQs
Q: Will Bitcoin recover from this drop?
A: Experts like Han Xu believe macroeconomic shifts (QT ending, M2 growth) could fuel a rebound.
Q: Is the $1 million price target realistic?
A: While speculative, Han’s analysis ties it to Bitcoin’s scarcity and gold’s historical performance.
Q: How does QT impact crypto?
A: QT tightens liquidity, raising rates. Its end may restore risk appetite in crypto markets.
👉 Institutional Crypto Strategies Explained
Current Market Snapshot
- BTC Price: $104,400 (-3% in 24h)
- ETH & SOL: Down 9% and 10%, respectively
- Corporate BTC Holdings: $85.2 billion (per BitcoinTreasuries)
Disclaimer: This content represents the author’s views and not financial advice. CFD trading carries high risks—learn more.
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