See Why Bitcoin Could Kick Off 2022 On A Rally

After being rejected north of $48,000, Bitcoin has been dancing on vital support throughout the weekend.

The top cryptocurrency by market capitalization has been steadily declining, and it now trades at $45,937, down 1.5 percent in the last day. Any attempt by the bulls to reclaim control has been thwarted by intense selling pressure. As COVID-19's Omicron variation spreads, Bitcoin might be reacting badly to a more hawkish US Federal Reserve and increased uncertainties in the legacy market.

Jerome Powell's financial institution has been hinting at an early start to tapering. When Bitcoin made a push towards $60,000, according to pseudonym analyst Lightcrypto, this led huge investors to de-risk and liquidate their investments.

As a result, these institutional investors altered their approach to safeguard their EOY returns, and they were wary of re-entering the market in these present conditions. Like other experts, Light believes Bitcoin has seen “programmatic selling activity.”

OTC flows all this week have all been people tapering their positions. Today marks the final day of the year for many funds and corps. I dont have a feel if that means for the market.historically we've the gambit of price action during the holidays w/ Q1 setting a new trend.— IamNomad (@IamNomad) December 17, 2021

As stated by NewsBTC, the decreasing trend has hit the derivatives market, resulting in a 25% drop in Open Interest (OI). This, along with lower engagement from regular investors who are more interested in other cryptocurrencies than Bitcoin, has bolstered the current price movement. According to the analyst:

Whereas bulls have been cautious, bears have taken to aggression, pushing perpetuals basis negative on some venues and building OI, while the large players who derisked in the $60k area have reversed course and begun to absorb panic- and short-selling.

How China will lose its power to Influence Bitcoin price

On the plus side, Light's programmed selling behaviour may come to a stop in the near future, allowing for the following rise. Material Indicators researchers released data on Twitter that revealed a historic halt to this behaviour from December 20th to December 25th.

Binance shows signs of scheduled selling. Most months this year (legend), we saw accelerated selling into mid-month. It stops around the 20th – 25th of every month, also generally marking the bottoms on PA. Not following this pattern, marked tops for the given month.#BTC pic.twitter.com/lH4YMM0Ps3— Material Scientist (@Mtrl_Scientist) December 19, 2021

Typically, this easing in selling pressure leads to a Santa Rally, a post-Christmas eve surge in Bitcoin and other cryptocurrency values. This time, the phenomena might catch the market off guard, according to Light, who also speculated on the potential of major players trying to get ahead of the next positive trend:

Funds are likely done (or close to it) with structural sell flows, are cashed-up, and will now consider frontrunning the other way, namely, incoming buy flows in January.

Light's optimistic thesis is supported by the fall in OI and leverage holdings, the fact that Bitcoin has plummeted 35% from its all-time high into a historically bullish season, and the fact that significant players now have the funds to initiate new bets. The bears will be “stoneless soon enough,” according to the researcher.

Furthermore, Huobi and OKEx, two prominent crypto exchanges, would delete the “bulk of mainland users,” according to Light. Because the Asia trading sessions have resulted in unfavourable price movement in 2021, this might have bullish ramifications for Bitcoin.