We checked the current data: today Bitcoin is trading at $41,950. In general, the cryptocurrency is now characterised by serious volatility, i.e. sharp changes in value. For example, in this 15-minute chart of BTC, its price has managed to bottom out at $41,200 and rise to a peak of $42,786.


Bitcoin 15-minute chart

When will Bitcoin start to rise?

Bitcoin is trading below $42,000 for the first time since early September. During its local fall, the coin has never been able to show a single strong rebound, meaning there is very little confidence in the strength of buyers in the market. Well, there are several possible reasons for it.

The first one is the massive protests in Kazakhstan. The country has become a new home for a huge number of Bitcoin miners after China banned their activities. Overall, Kazakhstan concentrates about 18 percent of the network’s hash rate, i.e. the computing power of the miners’ equipment. The local population has now had problems accessing the internet, which has affected the drop in hash rate, which traditionally goes in tandem with the drop in the price of Bitcoin itself.

Obviously, the price of BTC is hardly dependent on the hash rate itself, but a noticeable drop in network processing power that happened last week is a negative development. Well, that's enough to create panic among investors.

Bitcoin hash rate trend over the last 30 days

The second reason for the bad situation with Bitcoin and the coin market in general was cited by researchers at analytics platform Arcane Research. Here’s a quote from their latest publication, published by Decrypt.

Traditionally, Bitcoin trading volumes fall after Christmas, with activity in spot trades minimal with the cryptocurrency’s volatility dropping. The low value has a negative impact on the asset’s price.

That is, experts banal that the holiday season has forced ordinary traders and investors to step away from their trading devices and take care of family and loved ones. Even if not everyone in the cryptocurrency niche did so, it had an impact on the trading volumes needed to move asset values anyway.

Bitcoin price over the past two weeks

On top of all this, many analysts are “blaming” the current problems on massive liquidations in Bitcoin margin trading. To recap, a liquidation is the forced closing of a position by a trader trading on the exchange’s borrowed funds, and it occurs when the position is at risk of becoming unprofitable. At the same time, a cascade of liquidations, i.e., an avalanche of closing positions on exchanges due to gradual liquidations, often leads to a rapid drop in BTC prices.

According to Coinglass, the amount of liquidated positions across all exchanges reached $250 million on January 5 alone. This is the largest liquidation volume per day in the entire previous month.

Glassnode experts, on the other hand, have a more positive short-term outlook for the market. According to them, Bitcoin’s price will be moving in a horizontal channel for some time to come, but from a fundamental point of view, the cryptocurrency is fine. Here’s their cue.

While Bitcoin network user activity indicates rather “sluggish” demand from crypto-enthusiasts, the number of illiquid bitcoins is impressive. The rise in this figure is a sign of the confidence of the more “smart and patient” market players.

As a reminder, "illiquid" bitcoins are coins that have been idle for a long time on cryptocurrency wallets that are not normally used for sales. The more such BTCs there are, the more investors who want to keep them for the long term with the expectation of a price increase and, therefore, less pressure from sellers on the market.

The dynamics of illiquid bitcoins


The bottom line is that the current situation in the cryptocurrency market arose due to low trader activity and negative events such as the Bitcoin network's hash rate collapse. However, experts do agree that the potential of digital assets should, in theory at least, be enough for at least one more run of the coin market. After several weeks of niche decline, it is hard to believe in such a scenario at the moment, though.


Let’s hope that after another phase of accumulation, the crypto industry moves on to a new round of global bull run. What do you think about this? Share your opinion in our Millionaire Crypto Chat.