Bitcoin is back above $43,000 just days after making a swift recovery from below $40,000 to $42,000. This trend reversal is believed to be due to a number of recent developments that have painted a bullish narrative for the flagship crypto token.
The Grayscale Effect Is Wearing Off
Bloomberg analyst James Seyffart recently highlighted how BlackRock’s Spot Bitcoin ETF, IBIT, went toe-to-toe with Grayscale’s GBTC on Day 12 of trading in terms of trading volume. This happened to be the closest that IBIT or any Spot Bitcoin ETF had come close to GBTC, which holds the “liquidity crown.”
This represents a positive development for Bitcoin’s price since IBIT’s volume, more of inflows, is able to suppress GBTC’s volume, which has been majorly outflows. The outflows recorded by GBTC following its Spot Bitcoin ETF conversion had partly contributed to the flagship crypto token dropping below $40,000.
However, GBTC investors seem to be cooling on the profit-taking that had overwhelmed the fund as it has now seen a reduced outflow for the fifth consecutive day. BitMEX research revealed in an X (formerly Twitter) post that GBTC had seen an outflow of $192 million on January 29.
That figure also represented GBTC’s lowest daily outflow yet and the first time it was seeing a daily outflow below $200 million. This recent trend of reduced outflows has evidently provided some form of relief to the Bitcoin market, seeing that Grayscale’s selling pressure has subsided.
Meanwhile, the Bitcoin bulls also contributed to ensuring that Bitcoin didn’t stay down for too long. Data from IntoTheBlock showed that Bitcoin whales have increased their BTC holdings by 76,000 BTC since the start of this year. That suggests that there was a reasonable demand for the crypto token even when Grayscale continued to offload its BTC holdings.
BTC price holding strong above $43,000 | Source: BTCUSD on Tradingview.com
Other Factors Behind The Bitcoin Recovery
NewsBTC recently reported how macroeconomic factors like the latest inflation data and the US debt being at an all-time high had contributed to Bitcoin’s recovery to $42,000. These factors are still playing out in Bitcoin’s current momentum, which has seen it rise above $43,000.
Moreover, the Federal Open Market Committee (FOMC) meeting is scheduled for January 30 and 31, and the CME FedWatch Tool predicts that there is a 97.9% chance that interest rates remain the same. Rates holding steady, rather than a hike, are good for the market.
This also provides a plausible explanation for the recent surge in Bitcoin’s price since investors are already positioning themselves in anticipation of the likely outcome of the Feds meeting. Another event these investors will be positioning themselves ahead for is the Bitcoin Halving.
Market intelligence platform Santiment recently revealed that Bitcoin’s supply on exchanges has continued to reduce, with BTC holders moving their tokens to cold storage. This move could well be in anticipation of the likely gains that Bitcoin is expected to see once the Halving event takes place.
Chart from Tradingview.com
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
Credit: Source link
