In the past 24 hours, as the Christmas atmosphere thickens, the price of Bitcoin (BTC) has experienced a slight rise. At the time of writing, Bitcoin's trading price is locked at $98,056, achieving a 4.16% increase compared to the previous day.
In trading on Christmas Eve, Bitcoin’s price movement resembled a roller coaster, jumping from a low of $93,461 to a high of $99,419. The price fluctuations on this day sparked widespread discussion among analysts about BTC's performance post-holiday.
In this context, Bitcoin will maintain a relatively stable consolidation during the Christmas week, and subsequently, as the demand for short positions gradually increases, the market may welcome a new distribution trend.
This leads to a pullback. However, as the index has entered negative territory, analysts expect the market to continue rising.
With the increasing buying pressure, the rise in short-selling demand could 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 flow ratio surged from 0.084 to 0.137.
When the flow ratio rises, it signifies 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 a price increase as buying pressure mounts.
Moreover, the increase in inflows means more BTC is being transferred from exchanges, thereby increasing scarcity. As more and more traders turn to buying cryptocurrencies, it has now become scarce, which can be seen from the continuously rising stock-to-flow ratio.
When Bitcoin becomes scarcer, its price will rise, as increased demand and reduced supply lead to a price increase.
What’s next for BTC?
As investors' demand for short-selling continues to grow, these traders may seem to face a short squeeze. The demand for short-selling causes the opposite market reaction, thereby pushing prices higher.
Therefore, if demand remains unchanged while supply decreases, we could see Bitcoin reclaim the $100,000 resistance level after Christmas. However, if the cryptocurrency continues to consolidate sideways, it could drop to $96,600.