Our experts analyzed the market situation and told how it may change this week for Bitcoin and the market as a whole
During the period from January 22 to January 28, the Bitcoin price showed high volatility. During the week, Bitcoin traded in a wide range from $38,555 to $42,246.
On Monday, January 22, the price fell below the $40k mark, reaching $39,480. The drop was caused by the active outflow of funds from Grayscale's bitcoin-ETF amid the endorsement of competing products.
On Tuesday, January 23, the Bitcoin price fell to a low of $38,555. And that led to a wave of liquidations in the futures market. The outflow from Grayscale continued to exert pressure.
On January 24 and 25, quotations consolidated in the range of $39,484 - $40,555 with multidirectional dynamics. High volatility remained on the market. Market participants were waiting for some new portion of positive news.
On Friday, January 26, at the end of the day, the BTC/USD pair rose by 4.66% to $41,823. Buyers managed to stop the collapse of the crypto market. After a 13-day drop of 21% from the January 11 high of $48,969, the price recovered 9.57% to $42,246. They have reversed the drop for January 22, and this is a positive for the whole market.
Reasons for the fall in the price of Bitcoin
Bitcoin's downward correction has been largely attributed to redemptions in Grayscale Bitcoin Trust (GBTC). Before GBTC was converted into an ETF on January 11. And it was one of the few ways for U.S. investors to access BTC without owning the underlying cryptocurrency. After the long-awaited approval on Jan. 10, investors took the opportunity to sell their GBTC units, locking in profits on their trades. This meant an exit from the cryptocurrency market, hence the downward pressure on the bitcoin price. Outflows from the fund totaled nearly $4 billion.
The price bounced off the $38,555 support. The recovery accelerated after JPMorgan said that the peak of GBTC sales is mostly over. The upward correction intensified from the European session with the decline in the dollar index. The outflow of funds from the Grayscale trust slowed down, which led to an easing of pressure on the cryptocurrency.
BlackRock's iShares Bitcoin ETF iShares (IBIT) has had a significant impact on the cryptocurrency investment industry. In just 10 days after the fund's launch, the company has accumulated $1,982,095,794 or 49952.32570 BTC (from a report from BlackRock's website) in assets under management (AUM) after the fund's launch and market cap. The amount indicates a lot of interest among investors. At the current exchange rate, it is already over $2 billion.
When the price correction will end
Cautious investors have now taken a wait-and-see attitude. As this is only the first upward wave after the market collapse. Then sellers will check buyers once again. And how ready they are to defend the $38,555 level and raise the rate to $69k for Bitcoin by the halving, which will take place around April 20.
BitRiver predicts that the decline phase will end on February 10. Then we can test the level of $50 thousand. In order to support the bullish trend from the low of $24,901 from September 11, 2023. The higher the buyers drive the price, the less likely it is to update the $38,555 support.
There is great news for buyers now - a pin-bar is forming on the weekly chart - a green body with a long lower shadow. Our experts remind that the fall from $48,969 started with such an inverted candle. And this is a bid for growth up to $45 thousand.
Important events of this week
The economic calendar is quite full of important data. January 30 will see the release of Eurozone GDP data for the fourth quarter. January 31 will see the release of China's manufacturing PMI for January. And oil inventory reports from the American Petroleum Institute and the U.S. Department of Energy, the U.S. Federal Reserve meeting and J. Powell's press conference. On February 1, the States will publish the index of business activity in the manufacturing sector. And on February 2 - a report on the employment market (unemployment, new jobs, average hourly earnings). And also the consumer sentiment index from the University of Michigan for January.
As for the Federal Reserve's next moves, CME Group's FedWatch tool predicts a rate hike at next Wednesday's (Jan. 31) Fed meeting with a 96.7% probability. Votes in March are split, but the probability of a cut in May is estimated at around 87%.