Today, the price of Bitcoin is finally on the rise.
For now, it is not a sufficient rise to consider the bear-market that began a couple of weeks ago as over, but at least it has allowed for the recovery of all losses from the weekend and Monday.
To be honest, today’s rise could also serve as a springboard for further increases in the coming weeks, but there is still at least one specific factor holding back the price of Bitcoin.
Summary
Today’s Rise in Bitcoin Price
By the end of November, the price of BTChad risen above $90,000.
In fact, for four days it fluctuated between $90,000 and $92,000 with a brief spike to $93,000.
It was thought that December could start with renewed momentum, but instead, during the night between Sunday and Monday, things took a downturn once again.
The issue is that right at the reopening of the oceanic stock exchanges after the weekend, a speculative mini-bubble began to inflate on the silver price, which drained liquidity from other markets. The main casualty was the crypto market.
Thus, within a few hours, the price of Bitcoinplummeted first to $85,000, and then even below $84,000.
Yesterday, however, it managed to bounce back above $86,000, and during the day it also managed to recover $90,000.
Today the rise continued, nearly reaching $94,000, before retreating to $93,000.
The Underlying Issue
In theory, when there is a lot of liquidity circulating in the financial markets, it is difficult for a market like silver to drain liquidity from one like Bitcoin.
The real issue is that we are currently experiencing a minor liquidity crisis.
Indeed, with the onset of the USA government shutdown on October 1st, government expenditures were legally halted. This led to an unusual accumulation of over 150 billion dollars in the US government accounts.
It involved 150 billion dollars that under normal circumstances would have been released into the market, but instead remained locked for a full six weeks.
This caused a minor liquidity crisis that negatively impacted all American markets, but particularly the crypto markets.
The End of the Shutdown
The US government shutdown ended on November 12, but in the following weeks, only 50 out of the 150 billion that had accumulated in US government accounts were released.
In fact, to be precise, only 12 were released in the first week after the shutdown, while nearly 40 were released in the second week. The data for the third week is not yet available and will only be released tomorrow late in the evening.
Therefore, although the shutdown has ended, the minor liquidity crisis it caused has only slowly begun to subside.
It is possible that a full recovery may still take between two to four weeks, although some minor positive effects have already begun to appear.
It is indeed likely that today’s rise in Bitcoin’s price, which began yesterday, is partly due to the funds injected into the markets by the US government in recent days.
Bitcoin (BTC) Price Predictions
Currently, the gap accumulated due to the aforementioned minor liquidity crisis is still absolutely ongoing.
Regarding Bitcoin, however, this gap did not begin to manifest from the first day of the shutdown, but only starting from mid-October, when its price dropped anomalously compared to expectations.
Additionally, it increased around mid-November, when the shutdown had already ended but the minor liquidity crisis had not yet begun to subside.
With Monday’s decline, the gap further widened, but with yesterday’s and today’s rise, it should have started to close.
Timelines
Unfortunately, both the minor liquidity crisis and the gap accumulated by Bitcoin in recent weeks are still absolutely ongoing.
For them to return, the first thing needed is for the US government to inject at least several more tens of billions of dollars into the markets, at least to approach the total amount of 150 billion accumulated during the shutdown.
It is unlikely that this will happen in the coming days, whereas it seems quite probable that it will occur over the next few weeks.
Moreover, to ensure that the Bitcoin gap is also recovered, global financial markets would need to return to a situation where there is an abundance of liquidity, so that drains like the one on Monday no longer occur.
Therefore, it would be incorrect to claim that today’s rise has ended the bear market that began in the second half of November, although the path out of this situation at least seems to be starting to emerge.
