Bitcoin’s Bull Run at Risk: 3 Key Factors That Could Trigger a Pullback

1. Tightening USD Liquidity

Liquidity is the lifeblood of all asset classes, including crypto. Unfortunately for Bitcoin bulls, USD liquidity is shrinking due to significant changes in the U.S. Treasury’s financial strategy.

Over the past month, the Treasury General Account (TGA) balance has surged from $623 billion to $800 billion, indicating that the government is pulling liquidity from the financial system rather than injecting it. This tightening could lead to higher borrowing costs and reduced risk appetite among investors, making it more difficult for BTC to sustain its upward momentum.

Prominent investors, including Arthur Hayes, have warned that diminishing liquidity could have a cooling effect on Bitcoin’s price action, creating a challenging environment for further growth.

2. Trump Administration’s Hesitation on BTC Reserve

During his campaign, President Donald Trump hinted at creating a strategic BTC reserve—a move that excited investors and helped push BTC from $70,000 to over $100,000. However, since taking office, his administration has shifted its stance from active implementation to merely “evaluating” the feasibility of such a reserve.

This shift in rhetoric has disappointed crypto investors who expected swift action, similar to Trump’s approach to other policy initiatives. Market analyst Jim Bianco noted that Washington often uses terms like “evaluate” when it wants to delay or avoid taking action.

The market reacted negatively to this uncertainty, with BTC slipping from over $100,000 to $96,000 following comments from Trump’s crypto task force leader. If this hesitation continues, it could dampen investor confidence and slow Bitcoin’s momentum.

3. Bearish Technical Indicators Emerge

For traders who rely on technical analysis, there is a concerning development: the reappearance of a pattern that marked the 2021 bull market peak.

Bitcoin’s 14-week Relative Strength Index (RSI) has recently shown a bearish divergence, meaning that while BTC’s price has made higher highs, the RSI has formed lower highs. This suggests weakening bullish momentum, similar to what was observed before the last major Bitcoin correction in 2021.

If this pattern persists, BTC could struggle to break above its current range and might even face a significant pullback unless renewed bullish momentum emerges.

Conclusion

While Bitcoin has demonstrated resilience in the past, these three factors—tightening USD liquidity, policy uncertainty from the Trump administration, and bearish technical signals—could pose significant challenges for its next breakout. Investors should closely monitor these developments, as they could determine whether BTC continues its bull run or faces a temporary setback.

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