In the past 24 hours, with the festive atmosphere of Christmas growing stronger, the price of Bitcoin (BTC) has experienced a slight rise. At the time of writing, Bitcoin's trading price is fixed at $98,056, achieving a 4.16% increase compared to the previous day.
In trading on Christmas Eve, Bitcoin's performance resembled a roller coaster, jumping from a low of $93,461 to a high of $99,419. The price fluctuations of the day sparked widespread discussion among analysts regarding BTC's performance after the holidays.
In this context, Bitcoin will maintain a relatively stable consolidation during the Christmas week, and thereafter, as the demand for short positions gradually increases, the market may welcome a new distribution trend.
This has led to a pullback. However, as the index has entered negative territory, analysts expect the market to continue to rise.
With the increase in buying pressure, the rise in short-selling demand may lead to a short squeeze. This surge attracts more buyers, resulting in a self-reinforcing rebound.
We can see the demand for Bitcoin over the past three days. During this period, the BTC fund flow ratio soared from 0.084 to 0.137.
When the fund flow ratio rises, it means that more funds are being allocated to Bitcoin. This trend is a bullish signal, indicating that investors are willing to allocate more funds to BTC. This leads to price increases as buying pressure rises.
Moreover, the increase in inflows means that more BTC is being transferred from exchanges, thereby increasing scarcity. As more traders turn to purchasing cryptocurrencies, it has now become scarce, as evidenced by the continuously rising stock-to-flow ratio.
As Bitcoin becomes scarcer, its price will rise because the increase in demand and the decrease in supply lead to higher prices.
What is the next step for BTC?
As investor demand for short-selling continues to increase, these traders may seem to be facing a short squeeze. The demand for short-selling leads to an opposite market reaction, thereby pushing prices higher.
Therefore, if demand remains constant while supply decreases, we could see Bitcoin reclaiming the $100,000 resistance level after Christmas. However, if the cryptocurrency continues to consolidate, it may drop to $96,600.