Three recent developments may hinder Bitcoin’s bullish momentum, suggesting a potential decline below the $90,000 to $110,000 range. Tighter USD liquidity, the Trump administration’s hesitation regarding a strategic Bitcoin reserve, and technical bearish indicators raise concerns for the cryptocurrency’s price sustainability. Investors should remain cautious in response to these signals.

Recent developments raise concerns for Bitcoin (BTC) bulls, with the possibility of a downturn below the $90,000 to $110,000 range. Sources of liquidity are tightening, as the Trump administration is reconsidering a strategic Bitcoin reserve, and crucial chart patterns suggest a decline in upward momentum. BTC has experienced a stairstep bull run since early 2023, characterized by modest price increases followed by consolidation periods.

The current consolidation phase of BTC, ranging between $90,000 and $100,000, mirrors prior bull runs following significant price rebounds from $20,000. Experts generally anticipate a breakout, similar to previous patterns from mid-2024 and early 2023. However, three developments present potential barriers to this optimistic forecast.

First, tightening USD liquidity presents a considerable challenge. Enhanced USD liquidity is often vital for risk assets, including cryptocurrencies. Arthur Hayes, chief investment officer at Maelstrom, highlights that the USD cash balance in the Treasury General Account has surged from $623 billion to $800 billion in just four weeks, indicating tighter monetary conditions that could suppress economic activity and increase borrowing costs.

Second, the Trump administration’s reticence regarding the establishment of a strategic Bitcoin reserve adds uncertainty. While this initiative previously bolstered BTC prices significantly, officials now wish to evaluate its feasibility. Market sentiment soured following remarks by a Trump-appointed official, indicating a shift from previously proactive measures, which might dampen Bitcoin’s upward trajectory.

Lastly, technical analysis reveals a concerning pattern reminiscent of the 2021 market peak. The 14-week relative strength index (RSI) shows bearish divergence, suggesting a potential slowdown in bullish momentum. Should the RSI fail to break the declining trendline, it will reinforce the current negative setup, hindering prospects for Bitcoin’s price recovery.

In conclusion, Bitcoin faces significant headwinds due to tightening liquidity, policy indecision regarding a BTC reserve, and adverse technical indicators. These factors collectively cast doubt on the likelihood of sustaining the current bullish momentum, possibly prompting a decline below the critical $90,000 to $110,000 range.

The Bitcoin market is currently experiencing a critical phase, following a remarkable bull run since early 2023. BTC has shown incremental price growth with periods of consolidation, typically setting the stage for higher price movements. However, recent macroeconomic factors and governmental decisions surrounding liquidity suggest a potential shift towards downside risks, challenging the sustainability of its bullish trend.

The combined effects of tightening liquidity, cautious government policies regarding Bitcoin reserves, and bearish technical indicators pose significant risks for BTC bulls. As the cryptocurrency landscape becomes increasingly complex, these developments warrant close attention from investors and analysts, as they may influence Bitcoin’s price trajectory and overall market sentiment.

Original Source: www.coindesk.com

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