Charting a textbook stair-step ascent since the dawn of 2023, Bitcoin (BTC $111,324.27) has shown a pattern of gradual price gains interrupted by sideways pauses that lay the groundwork for subsequent upward surges.
This prolonged consolidation, hovering between $90,000 and $100,000, marks the third cooling-off phase within the larger bull run ascending from $20,000. Prevailing sentiment expects this phase to culminate in another bullish breakout, mirroring similar moves witnessed in 2023 and projected for mid-2024.
USD Liquidity Tightening: A Headwind for Risk Assets
When it comes to asset classes—crypto included—few things ruffle feathers like shrinking fiat liquidity, especially when the currency in question is the world’s reserve heavyweight, the U.S. Dollar (USD). Unfortunately for Bitcoin bulls, dollar liquidity is constricting amid multiple headwinds, as Arthur Hayes, Maelstrom’s CIO, recently pointed out on social platform X.
Particularly telling is the jump in cash held within the Treasury General Account (TGA)—the U.S. government’s Fed checking account—which soared from $623 billion to $800 billion in just one month, according to MacroMicro data. This bloating TGA balance signals funds being pulled out of circulation, tightening liquidity.
Last month, after the U.S. struck its self-imposed $36 trillion debt ceiling, market watchers hoped the Treasury would bleed down its TGA cash stash to keep the government funded—an extraordinary measure that in early 2023 had fueled risk-taking across equities and cryptocurrencies by boosting liquidity. This time, however, the TGA balance instead increased, hinting at a liquidity squeeze.
“We’re entering territory where vital liquidity channels are either drying up or getting clamped tighter,” warned Anddy Lian, intergovernmental blockchain specialist and thought leader, on X. “Expect higher borrowing costs, a slowdown in economic momentum, and trickier conditions for risk assets like crypto.”
Trump’s Crypto Reserve Plans: From Promise to Puzzling Pause
Since January 20, the Trump administration has methodically pursued a swath of campaign targets—from tariffs to immigration—yet one high-profile crypto-related promise remains conspicuously unsettled: creating a strategic Bitcoin reserve. This initiative, once a major catalyst behind BTC’s leap from $70,000 to over $100,000, now seems to be stuck in “evaluation” mode.
The administration’s cautious pivot toward studying the viability of a Bitcoin reserve contrasts sharply with Trump’s usual rapid-fire action on other fronts, leaving crypto investors frustrated.
Jim Bianco, president and macro strategist at Bianco Research, LLC, expressed skepticism: “Trump said he’d build a $BTC reserve, not ‘review’ it. Evaluation is the bureaucratic stall tactic—Washington’s polite way of saying ‘maybe not.’”
Following comments from Trump’s crypto czar on CNBC about prioritizing an assessment of a Bitcoin reserve’s feasibility, BTC slid overnight from over $100,000 to around $96,000.
Quick Fact: The United States debt ceiling reached $36 trillion in 2023, marking an all-time high that has repeatedly influenced federal liquidity and market dynamics.
The Comeback of 2021’s Bearish RSI Pattern
Technicians eyeing charts for clues about Bitcoin’s next move should scan the 14-week Relative Strength Index (RSI) for warning signs. Recently, this momentum oscillator has exhibited a bearish divergence reminiscent of the 2021 peak.
In essence, while BTC prices have managed to notch higher highs, the RSI has failed to keep pace, producing a lower high compared to December’s peak—classic bear divergence. Such a disconnect often presages a weakening bullish drive.
This pattern echoes the warning signals that rang loud in 2021 before Bitcoin faced a major top.
However, the negative forecast tied to this setup would be overturned if the RSI climbs above the declining trendline defining the divergence—an indicator of a fresh surge in buying pressure and renewed bullish momentum.
Summary of Key Risk Factors Affecting Bitcoin’s Next Bull Run:
- Contraction of USD liquidity: Higher Treasury balances signal less cash flowing into markets, pressuring risk assets.
- Delayed Bitcoin reserve policy: The Trump administration’s shift from action to evaluation dampens bullish enthusiasm.
- Bearish RSI divergence: A technical warning echoing the 2021 top, hinting at exhaustion in upward momentum.
