Bitcoin’s price took a dramatic dip this Sunday, dropping to $92,941 per coin at 5:30 p.m. ET, signaling a volatile day for the leading cryptocurrency. The broader crypto market also took a hit, with total market capitalization falling by 1.61%. Bitcoin itself lost 1.42% in the last 24 hours, continuing a trend of subdued trading activity as the holiday season slows down market engagement.
BTC Struggles to Stay Above $93,000 Amid Quiet Holiday Trading
As the weekend unfolded, Bitcoin attempted a recovery after hitting the low of $92,941, trying to regain its footing above $93,000. On Saturday, BTC was hovering comfortably above $95,000, valued at $95,529 per coin. With the holiday season in full swing, however, Bitcoin’s trading volume has significantly diminished, clocking in at just $26.18 billion over the past 24 hours. Key technical indicators on the 1-day BTC/USD chart, such as the relative strength index (RSI) and Stochastic, show neutral territory, signaling indecision in the market.
Declining Liquidity Indicates Reduced Selling Pressure in the Long Term
Despite the short-term pullback, long-term indicators present a more optimistic outlook. Data from Cryptoquant reveals a sharp decline in Bitcoin’s sell-side liquidity, which has dropped to just 6.6 months. This represents a significant reduction from 41 months in October, suggesting that selling pressure may ease as we move into 2024. In particular, the Liquidity Inventory Ratio aligns with past rallies observed in Q1 and Q4 of previous years, signaling potential for a market rebound.
US Interest Remains Tepid as Holiday Season Continues
One of the key factors contributing to Bitcoin’s struggles is a marked decline in U.S. interest, as seen in the negative Coinbase premium of $169.18. This indicates a lull in buying activity, possibly linked to the holiday period. On the other hand, South Korea’s ‘Kimchi premium’ remains present but has decreased from 3.38% on Dec. 25 to 1.3%, further emphasizing the global shift in market dynamics.
As the broader crypto market continues to reel from price declines, other altcoins like XRP, BNB, and DOGE have suffered heavier losses. Notably, Fartcoin plunged by 15.27%, while tokens like Phala Network (PHA) and FTX Token (FTT) saw significant gains.
In the derivatives market, the downturn resulted in $126.39 million in liquidations, with the majority coming from long positions. As the year draws to a close, the market remains in a cautious state, awaiting new developments in 2024.
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