Can Bitcoin restart its bullish trend?

Bitcoin (BTC) once again falls below the $90,000 mark, despite the market showing positive signals from macroeconomic factors.

According to an expert, the main reason for Bitcoin’s weakness is the sharp decline in stablecoin inflows into the market. The expert emphasized that adding new liquidity is a prerequisite for triggering a sustainable bull run for Bitcoin.

Key Factors for Bitcoin to Reverse Its Trend

Data from Coinphoton shows that December continues to be a volatile period for the world’s largest cryptocurrency, following two consecutive months of decline. Notably, last November recorded Bitcoin’s biggest drop of the year.

As of now, BTC has recovered above $90,000, still down 2.7% in the past 24 hours. This decline occurred right after the U.S. Federal Reserve (Fed) decided to cut interest rates for the third time this year, by 25 basis points, bringing the target rate to around 3.50%–3.75%. Usually, interest rate cuts are seen as positive signals for the cryptocurrency market, and many investors expect prices to rebound.

Bitcoin Price Chart | Source: CoinphotonHowever, reality has gone against expectations. So, what is truly necessary for Bitcoin to reverse its current downtrend?

According to Darkfost’s analysis, the key factor is liquidity. Stablecoin flows into exchanges have dropped sharply from $158 billion in August to about $76 billion currently — a 50% decrease in just a few months. The 90-day average also fell from $130 billion to $118 billion, clearly reflecting a downward trend.

“One of the main reasons Bitcoin has not yet recovered is the lack of new money. When it comes to liquidity in the crypto market, stablecoins play the most important role,” the expert stated.

He also mentioned that the sharp decline in stablecoin flows signals waning demand. Bitcoin is currently facing continuous selling pressure without new capital absorption. In fact, recent slight recoveries mainly resulted from reduced selling rather than increased buying.

“For Bitcoin to start a genuine growth trend, the fundamental factor is the influx of new money into the market,” Darkfost emphasized.

A recent report from Coinphoton also shows that stablecoin issuers continue to generate new tokens, with market caps of major tokens like Tether (USDT) and Circle’s USDC reaching record highs this month. However, most of this supply is being absorbed by cross-border payment needs, while a large portion of the funds are shifting to derivatives exchanges instead of spot exchanges.

“Asia currently leads in stablecoin trading volume, surpassing North America. However, considering GDP share, Africa, the Middle East, and Latin America stand out more. Most of the capital circulates from North America to other regions,” IMF noted in a recent report.

Thus, the recent decline of Bitcoin indicates that individual macroeconomic factors are no longer sufficient to influence the market. Data has shown that the missing piece for a sustainable market reversal is new stablecoin liquidity. Additionally, market sentiment needs improvement, as cautious psychology and low participation levels are still restraining the capital shift into Bitcoin.

Ông Giáo