As the dust surrounding the “Trump Pump” trade settles, the price of Bitcoin (BTC) has established a range between $100,000 and $110,000 since the newly elected US president took office. The cryptocurrency asset rose 3.78% on January 21, but price action began to consolidate over the past 24 hours.
With BTC failing to show a clear directional headwind on the lower time frame (LTF), one analyst believed that the sideways movement could continue until the end of the month.
Will Quantitative Easing Fuel Bitcoin’s Next Rally?
Krilling, a full-time cryptocurrency trader, hinted at the possibility of a sideways consolidation between $100,000 and $110,000 until the Federal Open Market Committee (FOMC) meeting on January 28-29. said the merchant.
“Assuming there is no BoJ fraud, the FOMC will likely cut $100,000 to $110,000 by the end of the month.”
Analysts pointed to the possibility of another dump as they currently do not expect a rate cut on January 29th as expected. The CME FedWatch tool currently projects a 99.5% chance of interest rates remaining unchanged at 4.25% to 4.5%.
However, a dovish press conference or a hint of quantitative easing (QE) to address market functioning could trigger the next leap forward for risk assets.
According to data, as of January 22, the U.S. national debt reached $36.21 trillion, which is more than the quota of $36.1 trillion. Now that the debt limit has been reached, the expected solution is to increase the debt limit again. This is nothing new for Congress, where the administration has adjusted the debt limit 78 times since 1960.
This may eventually force the government to engage in QE, which could see the US Federal Reserve (Fed) resort to large-scale asset purchases. This will inject liquidity into the market and be a positive catalyst for risk assets. One particular way to track liquidity injections is to identify reversals in the Fed’s balance sheet trends. The balance sheet has declined from nearly $9 trillion to $6.8 trillion on January 15 due to quantitative tightening (QT) since April 2022.
Federal Reserve Balance Sheet. source: federal reserve bank
However, the above path is still subject to market speculation, and a more transparent path will only be revealed after January 28th and 29th.
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Bitcoin capital inflows decreased after reaching $100,000.
The market expected Bitcoin to enter a period of price discovery and aggressive bullish action after $100,000, but data from Glassnode suggests it may run out of fuel after reaching the milestone.
Bitcoin realization limit net position change chart. source: glass node
As you can see in the chart, BTC’s realized cap net position change has decreased from 12.5% to less than 5% since November 2024. This means that the amount of BTC moving above $100,000 is relatively lower than it was in early December 2024. Analytics platform reporting:
“Net realized profit realizations peaked at $4.5 billion in December 2024 and have now declined to $316.7 million (-93%). “The decline in sell-side pressure suggests the market is resetting to supply and demand balance.”
Bitcoin weekly analysis. source: Bitcoin Data 21
The above data shows that liquidity in the Bitcoin market remains thin. Despite these concerns, Bitcoindata21 said the overall cryptocurrency market cap is expected to “double” within six to eight weeks. Based on his weekly technical analysis, the analyst noted that “$150,000 for Bitcoin” is still possible, saying:
“Weekly RSI bounced from the bottom of the trend channel as in March 2017 and September 2020 (see red circle). “The bull market is not over as long as we stay in the channel.”
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This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.