A representation of bitcoin is seen in an illustration picture
A representation of bitcoin is seen in an illustration picture taken on June 23, 2017. Reuters

Plucky bitcoin's been holding steady since seeing off the chaos of the FTX collapse, gathering its strength to rally towards the dizzy heights of $30,000 in 2023.

Battered bitcoin's been unresponsive since being clobbered by the FTX collapse, taking in a deep ragged breath before plunging towards the depths of $5,000.

Place your bets, spin the wheel.

The world's dominant cryptocurrency has certainly been uncharacteristically muted over the past two weeks, treading water between about $15,770 and $17,350 in the eerie wake of the FTX-induced market mini-crash in November.

What happens next is anyone's guess.

"The question we need to be asking ourselves now is: Are there any sellers left in this market? To my mind, no, there aren't that many left," said Jacob Sansbury, co-founder of retail investor services firm Pluto.

Sansbury believes most over-leveraged miners, who tend to be large holders of bitcoin, have exited positions to pay off debts taken out in traditional money to fund their equipment and operations.

Indeed bitcoin's recent calmness could be down to the fact that there are fewer coins to sell: the amount held on exchanges for trading stands at 1.97 million, Coinglass data shows, down steeply from 2.33 million at the start of the year.

Major offloading has already taken place; November saw a 7-day realized loss of $10.16 billion in bitcoin investments as investors were forced to exit long-term positions, the fourth-largest loss on record by this measure, according to Glassnode data.

The cryptocurrency has already dropped more than 60% in 2022 and set to see its first annual loss since 2018.

Many remaining investors are placing their bitcoin into offline "cold storage" according to on-chain data, which should strengthen a floor price around $16,000, said Bob Ras, co-founder of Sologenic, an exchange and digital asset firm.

"Barring any more surprises in the market, it's hard to imagine BTC going significantly lower," he added.

Ras believes that if it wasn't for the high-profile collapse of crypto players FTX, Celsius and Terra this year, the price of bitcoin would be close to $25,000 now.

But this is crypto, and more surprises could well be in store, with a number of potential selling triggers on the horizon.

THE BEAR'S TALE

First potential peril is the risk of more bitcoin miners being forced to sell their holdings to stay afloat, as mining becomes increasingly expensive.

"Miners as a group start to become unprofitable under $20,000, so we're below (that) point," noted Ben McMillan, chief investment officer at IDX Digital Assets.

CrytpoQuant's miner reserve indicator, which tracks the amount of bitcoin held in miners' wallets, has dropped by about 7,722 bitcoin since November.

Market players also pointed to concerns about the Grayscale Bitcoin Trust, the world's largest bitcoin fund with $10.9 billion in assets. Parent company Digital Currency Group, which owns Genesis Trading, owes $575 million to Genesis' crypto lending arm, DCG's CEO told shareholders on Nov. 22.

Grayscale Bitcoin Trust's discount to its net asset value, is at an all-time low of 48% and shares have not traded at a premium since March 2021, Coinglass data showed.

DCG last month said troubles at Genesis' lending business had no impact on DCG and its subsidiaries, while Grayscale maintained it was business as usual and its underlying assets were unaffected.

"This could be the other shoe to drop," said McMillan, referring to the possibility of Grayscale running into financial trouble. "That said, if bitcoin can hold the $15,000 line through the DCG workout, that would be a strong indicator going into 2023.

A more hawkish than expected Federal Reserve at its final meeting of the year on Wednesday could further erode risk appetite and bitcoin's prospects, crypto watchers said.

GETTING TECHNICAL

The scenarios of bitcoin leaping to $30,000 or tumbling to $5,000 in 2023 were long-shot possibilities flagged by VanEck and Standard Chartered, respectively.

When it comes to the technicals, several analysts pointed to indicators showing bitcoin may have found support between $16,000 and $16,800.

The cryptocurrency could also run into resistance around the $17,490 level, said Eddie Tofpik, head of technical analysis at ADM Investor Services, cautioning that any long-term rally was likely to be challenging.

"Anytime we see a rally, it's one step up and then two or three steps down," he said.

Vetle Lunde, analyst at Arcane Research, said long-term bets could be appealing in the wake of the November turmoil.

Nonetheless, uncertainty reigns.

"Bear in mind that massive drawdowns tend to be followed by a long-lasting directionless market filled with apathy and unfathomable second-guessing," Lunde added.