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Bitcoin (BTC) once again recorded a dip below the $90,000 mark during today’s Asian trading hours, despite positive macro catalysts.
An analyst pointed to the decline in stipplecoin inflows as a primary factor behind Bitcoin’s current weakness, explaining that new liquidity is needed for an upward rally.
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The main factor that Bitcoin needs to go up again
Data from BeInCrypto Markets showed that December was a volatile month for the largest cryptocurrency. This follows two consecutive months of losses, with Bitcoin posting its biggest monthly decline of the year in November.
At the time of writing, BTC was trading at $89,885, down 2.7% in the last 24 hours. The drop came despite the Federal Reserve’s decision yesterday Reducing interest rates for the third time this year.
The bank cut interest rates by 25 basis points to a target range of 3.50%-3.75%. Lower interest rates are generally seen as a bullish trend for the crypto market. In reality, Many expected a recovery.
However, prices move in the opposite direction. So, if not, thenWhat does Bitcoin need? Especially to reverse its downward trend?
According to Darkfost, liquidity is the reason. The analyst explained that Stabilcoin inflows to the exchanges have fallen from $158 billion in August to about $76 billion today.
This represents a 50% decrease in just a few months. At this time, the 90-day moving average fell from $130 billion to $118 billion, indicating a clear trend.
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Darkfost’s post stated that one of the main reasons why Bitcoin is currently struggling to recover is the lack of liquidity inflow, and when we talk about liquidity in the crypto market we mainly refer to stipplecoins.
The analyst noted this sharp drop in stablecoin flows It indicates weak demand. Bitcoin is now facing continued selling pressure that has not been absorbed by the new capital. The trend also showed that minor rebounds are driven more by falling sales rather than new purchases.
“The key to Bitcoin returning to a true uptrend is new liquidity entering the market,” Darkvost said.
BeINCrypto highlighted this in a recent report However, stablecoin issuers continue to issue new tokens, with the market capitalization of major assets such as Tether (USDT) and Circle’s USDC reaching record levels this month.
The data showed, however, that a significant part of the supply is absorbed by the demand for cross-border payments. In addition, a large part of the flows move towards… Financial derivatives platforms Instead of instant platforms.
“Asia leads with the highest volume of stablecoin activity, surpassing North America, but in terms of GDP, Africa, the Middle East and Latin America stand out, with most flows from North America to other regions,” the IMF said in a recent report.
Bitcoin’s recent decline has highlighted that macroeconomic catalysts are no longer alone driving the market. The data made it very clear that the renewed liquidity for stablecoins is the missing ingredient for a sustainable bullish reversal, the market sentiment should improve, and the fear of the behavior and the lack of engagement continues to prevent the rotation of capital in Bitcoin.
