If you have been closely monitoring Bitcoin price movements recently, then you may have observed limited price action and lower volatility.
This is despite its latest bullish attempt which also highlights the cryptocurrency’s struggle to push back towards the $108,000 region.
This observation is a reflection of the weak demand currently present in the market.
A recent CryptoQuant analysis highlights some observations underpinning the current demand situation.
Bitcoin Funding Rates | Source: CryptoquantBitcoin has been demonstrating a bearish divergence between the rising price and declining funding rates.
According to the CryptoQuant analysis, this confirms the prevailing weak demand in the market.
The observation also reflects the spot market flows. For example, daily Bitcoin spot inflows were lower in January compared to November and December.
Bitcoin spot flows / source: CoinglassThe same spot flow data reveals that sell pressure (spot outflows) were quite prominent in January.
In other words, sell pressure has also contributed significantly to BTC ($102,240.11)’s struggle for strong bullish traction.
What Will Be the Next Major Bitcoin Catalyst?
The blockchain and crypto element was one of Trump’s main agendas during his campaign.
So far the U.S government appears to be in tune with its alignment with the crypto market.
Seeing that the U.S controls the global reserve currency, it was only a matter of time before other countries follow suit.
Numerous countries have already pivoted towards a pro-Bitcoin stance and the Czech Republic could be next.
Aleš Michl, the governor of the Czech National Bank has reportedly submitted a proposal which if passed, could allow the country to own crypto.
Source: XCzech Republic could become the first Central bank to hold crypto in their reserves if the Bitcoin proposal is approved.
The country will be able to convert as much as 5% of its €140 billion worth of reserves into BTC.
This means Czech Republic could pump as much as $7.28 billion dollars worth of liquidity into Bitcoin.
The country adds to the growing list of countries that have expressed interest in a Bitcoin strategic reserve.
The observation also highlights the ongoing race to get there. Analysts are eagerly waiting for the U.S to approve this move and this could be the next major catalyst.
Will February be Bullish or Bearish for Bitcoin?
In the absence of a catalyst, Bitcoin investors may revert to past behavior for the month of February.
However, BTC’s historic performance in the last 5 years did not reveal significant bias in favor of the bulls or the bears.
January’s performance was confirmation that the market is still in a state of directional uncertainty.
External unexpected factors could also influence BTC demand in February.
Meanwhile, a BTC price surge above its previous ATH high may fuel more market confidence.
On the other hand, Bitcoin could still be at risk of capitulation below $100,000 if demand fails to take over any time soon.
The post Bitcoin In February: What Are the Chances Of Strong Momentum? appeared first on The Coin Republic.
