Bitcoin Faces Challenges Amid Liquidity Concerns and Slow Progress on Strategic Reserve

Bitcoin has seen remarkable growth since the beginning of 2023, even reaching over $108,000 at its peak.

However, its price has recently experienced a slowdown, with Bitcoin now hovering between $90,000 and $100,000. This marks the third period of consolidation during its broader bull market, which began when the price was around $20,000.

Many expect this phase to end with a surge similar to those seen in mid-2024 and 2023, but analysts are highlighting factors that could indicate a weakening of Bitcoin’s bullish momentum.

One major concern is the tightening liquidity of the U.S. dollar. Blockchain expert Andy Lian explained that shrinking USD liquidity could pose challenges for all asset classes, particularly for riskier investments like Bitcoin and other cryptocurrencies.

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As liquidity dries up or becomes more regulated, it could dampen economic activity, increase borrowing costs, and create a tougher environment for risk assets, including Bitcoin.

Another issue is the slow progress in establishing a strategic Bitcoin reserve, which many investors anticipated would be quickly implemented under the Trump administration.

Despite early promises, the creation of such a reserve has faced delays. Jim Bianco of Bianco Research advised investors to be patient, suggesting that Washington’s slow pace in advancing the Bitcoin reserve initiative is typical of government action when facing opposition.

Kosta Gushterov