CryptoQuant CEO Ki Young Ju had pointed to the derivatives market as responsible for Bitcoin’s recent fall.
Bitcoin recently rose above $42,000, after trading below $40,000 for several days. This market recovery is believed to be the result of different factors, including recent revelations about the US economy.
Macroeconomic Factors Contributing to Bitcoin’s Recent Rise
The personal income expenditure (PCE) price index, a leading indicator of inflation, was released on January 26 and was reportedly lower than expectations. This suggests that inflation in the United States is cooling and experts predict that the Federal Reserve will likely reduce its aggressive monetary policies.
The Federal Reserve’s hawkish stance is known to have a negative effect on the price of Bitcoin and the crypto market in general. As such, this recent development is positive and is something that could have influenced investors to double down on their investments in the flagship cryptocurrency, thus causing a price surge.
Meanwhile, US Treasury data recently showed that the country has reached a historic debt of $34.1 trillion. While this has raised concerns about the imminent decline of the US dollar, it has also presented Bitcoin and other cryptocurrencies as a haven to protect against the possible devaluation of the country’s currency.
Interestingly, different financial analysts, including renowned economist Peter Schiff, have continued to predict the imminent fall of the US dollar. In light of this, financial author Robert Kiyosaki has urged everyone to invest in Bitcoin to avoid becoming poorer due to the government’s actions.
Another factor believed to have contributed to Bitcoin’s recent surge is the expiration of monthly BTC options contracts on Deribit. It is highly likely that the expiration outcome played a crucial role in Bitcoin’s rally.
GBTC Outflow Slows for 4th Consecutive Day
Grayscale’s GBTC recorded an outflow of just $255.1 million on Jan. 26, continuing a recent trend of reducing outflows from the fund. The Bitcoin ETF was reported to have experienced outflows of $515 million, $429 million, and $394 million on January 23, 24, and 25, respectively.
As Bloomberg analyst James Seyffart noted, January 26 also turned out to be the lowest exit day for GBTC since it converted to a Bitcoin Spot ETF. This development suggests that the fund’s investors may be stopping taking profits. It is also significant because Grayscale has contributed to the selling pressure that has plagued Bitcoin lately.
Since bitcoin ETFs became a “sell the news” event, traders have lacked the momentum needed to overcome the downward pressure. This has been attributed to large fund outflows from the Grayscale Bitcoin Trust (GBTC), possibly reflecting investors choosing to move into bitcoin ETFs with lower fees.
Notably, there has been a decline in fund outflows from GBTC for two consecutive days, indicating a reduction in selling pressure from trapped long-term investors who were unable to redeem their GBTC holdings earlier.
Bloomberg Senior ETF Analyst Eric Balchunas noted that while outflows from GBTC are trending downward, outflows from the other ETFs have slowed, with net flows being substantial at $824 million.
Therefore, with GBTC fund outflows decreasing day by day, it is possible for BTC to rise further from the current levels.
Most recently, Bitcoin is trading at around $41,700, up more than 4% in the last 24 hours, according to data from CoinMarketCap.
CryptoPredictions claims that the BTC price for today (28.01.2024) is forecast to be in the price range of $35,490,151 – $52,191,398. The price of Bitcoin is expected to end at $41,753,118 today.
By Audy Castaneda
