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Since the beginning of 2023, Bitcoin (BTC) 
$111,292 has exhibited a typical bullish market trend, with its price rising consecutively before entering a consolidation phase. Originating from a low of $20,000, this upward movement is now in its third stage, oscillating within a range of $90,000 to $100,000. This range is considered part of the bullish market, leading to expectations of a significant breakout. However, several developments could jeopardize Bitcoin’s position within this zone.
Decline in U.S. Dollar Liquidity
Not just the cryptocurrency market, but all asset classes are negatively affected by the contraction of fiat liquidity. In particular, the tightening of liquidity in the U.S. dollar, the world’s reserve currency, poses a danger to Bitcoin.
According to Arthur Hayes, Chief Investment Officer at Maelstrom, the cash balance in the U.S. Treasury General Account (TGA) increased from $623 billion to $800 billion within four weeks. This increase occurred after the government reached its current debt ceiling. In the past, the government has typically reduced the TGA balance to inject liquidity into the markets; however, this situation appears to be changing.
If the TGA balance remains tightly controlled, there is a risk of rising borrowing costs and a slowdown in economic activity. This could lead to a decrease in risk appetite within the cryptocurrency market.
Trump Administration’s Bitcoin Reserve Plan
The administration of the 47th U.S. President, Donald Trump, had previously announced plans to create a strategic reserve for Bitcoin. This news significantly contributed to Bitcoin’s rise from $70,000 to over $100,000. However, the Trump administration has now stated that it will only “consider” this plan, leading to disappointment among cryptocurrency investors who anticipated swift action.
Trump’s previous quick decisions regarding cryptocurrencies generated expectations for rapid implementation of this plan. However, the prolonged wait has caused Bitcoin’s price to decline from $100,000 to $96,000 late at night.
Repeating the 2021 Peak Model
For technical analysts, the 14-week Relative Strength Index (RSI) has become a crucial indicator to observe. This is because the RSI is showing a negative divergence despite upward price movements, reminiscent of the behavior observed just before Bitcoin reached its peak in 2021.
The RSI is forming a high below the peak it reached in December, conflicting with the ongoing price rises. If the RSI breaks its downward trend and moves upward, it could signal a new bullish market. However, for now, this negative structure persists.
