The rebound of the Bitcoin price might not hold

Yesterday, the news of Donald Trump‘s acceleration on the establishment of a strategic reserve in cryptocurrencies produced an excellent rebound in the price of Bitcoin. 

On Friday, in fact, it had also fallen below $80,000, and after a first small rebound, it had managed to climb back only above $84,000.

Note that $84,000 was a figure not reached again since November 11, clearly lower than all the bottoms of the long lateralization phase that lasted three months. 

The rebound of yesterday in the price of Bitcoin

Before the news regarding the strategic reserve in crypto spread, yesterday the price of BTC was still around $85,000.

However, the first rebound, that is, the one on Friday and Saturday, had already shown how probably the bottom below $80,000 was exaggerated at this moment. 

It was, in fact, the forced liquidations of leveraged long positions that caused the strong and sudden drop on Friday, which began when the price fell significantly below $84,000.

After Trump’s post on Truth yesterday, suddenly the price of Bitcoin jumped to $95,000, and this rebound was also partly caused by the forced liquidation of leveraged positions, although this time of the short ones.

These rapid movements, caused by forced liquidations and not by considered sales or purchases, generate several inefficiencies, which then tend to be reabsorbed. 

In fact, after the rapid rebound to $95,000, the price of Bitcoin has fallen, and for now, it has not yet returned to that threshold. 

The Holding of 90,000$

For now, the price of Bitcoin is staying above $90,000, but there are a couple of signals that force the hypothesis that it could also fall below this threshold. 

The first signal is precisely the one concerning the inefficiencies certainly generated by the rapid rebound partly caused by the forced liquidations of leveraged short positions. 

Such inefficiencies tend to be filled in the hours and days that follow, and it is not certain that they have already been filled. 

The second, on the other hand, is directly related to yesterday’s news. 

The doubts about reserves in altcoin

First of all, it must be said that yesterday Donald Trump did not establish the strategic reserve in cryptocurrencies of the USA. He only stated that he has ordered the presidential group working on it to move forward on this path.

The key point is that a bill establishing a strategic reserve in crypto will necessarily have to be put to a vote in Congress, and it is by no means certain that Congress will approve it. 

The problem is not so much with Bitcoin, but with the altcoins. 

Initially, it was thought that such a reserve could include only BTC, at least in an initial phase, because the USA already holds almost 200,000 BTC, with a value of about 18 billion dollars, confiscated by judicial authorities over the years and currently already available to the Department of Justice. 

If the Trump administration had limited itself to proposing to Congress not to sell those Bitcoins and to place them within a new strategic reserve, it is possible to believe that the proposal would have been received favorably. 

Instead, Trump stated that he would like to include in this reserve also ETH (Ethereum), XRP (Ripple), SOL (Solana) and ADA (Cardano). 

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The problem of Ripple

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The USA already owns 18 billion dollars in BTC, but they own altcoins for a dollar value that is enormously lower. 

The hypothesis is that, once a strategic reserve in cryptocurrencies is approved, they will be forced to purchase on the market ETH, and especially XRP, SOL, and ADA. 

The problem is that almost half of the XRP in existence are still in the coffers of Ripple, the private company that created this cryptocurrency. 

Will Congress accept the use of public money to buy XRP that could come from a private company? 

Should this doubt lead the markets to consider the establishment of a strategic reserve in cryptocurrencies, as desired by Trump, unlikely, it might start pricing it in on Bitcoin as well. 

If that were the case, yesterday’s rebound might end up not holding. 

The suffering of altcoins

In addition to this, it is important to emphasize that, despite Trump’s clear statements yesterday in favor of some altcoins, their rebound did not budge CMC’s altseason index from the recent lows.

In fact, this index has even dropped to 16, which certifies that the crypto markets are currently heavily in Bitcoin season (which begins with a value equal to or less than 25). 

The dominance of Bitcoin is over 61%, and it has been for about a month. 

Furthermore, compared to the all-time highs, while BTC is at -15%, ETH is still at -52%, XRP at -32%, SOL at -45%, and ADA even at -69%, not to mention the -70% of Dogecoin and the -80% of Avalanche. 

Although such a scenario is still not able to negatively affect the price trend of Bitcoin, in the crypto markets at this moment there is still fear, and all this suggests that another new rebound might not be particularly likely.

To tell the truth, at this precise moment, such a low altseason index should be interpreted as a positive signal, because it is always Bitcoin that starts the big bullrun and therefore it is necessary for crypto capital to move to BTC. But at this moment, the conditions for a true restart of the bullrun do not yet seem to be present.