Bitcoin: the price of BTC is in a Limbo

In these days, the price of Bitcoin (BTC) is floating in a sort of Limbo where it is difficult to understand which direction it wants to take.

In some ways, it indeed seems to be able to awaken, but in others, it seems heavily hindered by external factors.

The result is that it is not clear where it wants to go, even though to be honest the short-term sentiment seems quite negative.

Summary

• The Limbo of Bitcoin (BTC) Price
• The decline in the price of Bitcoin (BTC)
• A period of accumulation?
• A possible rebound in the price of Bitcoin (BTC)?
• The buying pressure
• The role of the USA

The Limbo of Bitcoin (BTC) Price

The Limbo, made famous by Dante Alighieri in his renowned Divine Comedy, is a temporary condition of high uncertainty.

Its characteristic is that it is indeed temporary, but without a precise timing that can indicate when one might exit it.

Well, the current situation of the Bitcoin price is precisely a temporary condition of uncertainty, but it is not known when it might end.

To tell the truth, there is at least a hypothesis of directionality, towards the downside, but this hypothesis has been circulating for a few weeks now without having yet materialized in an evident way.

The decline in the price of Bitcoin (BTC)

After the all-time high reached on December 17 above $108,000, the price of BTC on December 20 fell below $93,000. Since then, it has done nothing but move sideways more or less above that threshold.

By now, it has been twenty days that it has not been able to move far from $92,000, so much so that on January 6th it tried, climbing back above $100,000, but only for one day, since by the 7th it had already fallen back below.

At this moment, the key threshold seems to be precisely that of $92,000.

In the event that this kind of support does not hold, many expect a sort of collapse, perhaps towards $85,000 or maybe even below $80,000.

A period of accumulation?

However, there is also a second hypothesis circulating.

In fact, by analyzing the trend of the total number of BTC present on crypto exchanges, it is noted that there has not yet been a reversal of the trend.

Starting from the second half of February 2024, a long phase of reduction in the number of Bitcoins on exchanges began, most likely a sign of a long and consistent reduction in selling pressure as well. This reduction could have been the basis for the excellent price performance in 2024.

Although this long decline seems to have stopped this week, there is still no sign of a trend reversal from this point of view.

In other words, not only is the selling pressure still very low, but there are also no signs that it might increase in the short term.

Indeed, this very dynamic suggests that there might be an accumulation phase underway, which, however, does not rule out the possibility that the price could drop further.

A possible rebound in the price of Bitcoin (BTC)?

All this might suggest a subsequent rebound, once this phase of difficulty is over.

Moreover, there is also another clue that pushes in this direction.

In fact, while on one hand the short-term sentiment seems clearly negative, the medium-term sentiment does not appear to be negative.

In particular, such a strong US dollar, at a time when it should theoretically be weakening, suggests that many large investors and speculators have temporarily exited risk-on assets to accumulate dollars to spend as soon as possible to buy them back.

If this were the case, the hypothesis of the accumulation phase would be strengthened, given that accumulation periods work precisely in this way.

And so, in the event that the dollar should finally begin to weaken sooner or later, the consequence could be a rebound in the price of Bitcoin as well.

The buying pressure

Currently, the buying pressure is very low, and this prevents the price from rising.

But a deeper analysis reveals that at lower prices the buying pressure could also increase significantly.

It should be remembered that even the selling pressure is at very low levels, therefore if it does not rise significantly, in the event of an increase in buying pressure, the price should react with a rebound.

And the most interesting thing is that it only takes a 5% drop to start seeing this phenomenon emerge, namely a significant increase in (theoretical) buying pressure.

This dynamic seems to confirm the hypothesis of a possible rebound, even though it must be said that these are parameters whose values can change very quickly.

The role of the USA

In all this, an increasingly important role is being played by the USA.

In fact, the percentage of BTC owned by U.S. entities has risen to its highest levels.

🇺🇸 U.S. entities’ #Bitcoin reserve share hit ATH, now 65% higher than non-U.S. entities. pic.twitter.com/SSgotY6RL8

— Ki Young Ju (@ki_young_ju) January 9, 2025

Not even in 2016 had such percentages been reached.

The fact is that with the launch on the US stock exchanges of spot BTC ETFs last year, the ease of access for Americans to the Bitcoin market has increased significantly, and given that the US financial markets are the main ones in the world, the inevitable consequence has been a strong shift of the center of gravity towards America.

In light of this, the importance of the inverse correlation of the BTC price with the Dollar Index becomes increasingly relevant.

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