According to Cointelegraph: The price of Bitcoin – the world's premier cryptocurrency – surged past the $40,000 resistance level on January 26, marking an uptick of 3.2%. This unexpected rally followed the monthly Bitcoin options expiry valued at $4.5 billion, where the balance between Bitcoin call (buy) and put (sell) options played a significant role.
The positive shift in Bitcoin's performance was further bolstered by a dip in US inflationary pressures. Data from the US Commerce Department's personal consumption expenditures (PCE) price index exhibited a 2.9% year-over-year rise in December 2023, excluding food and energy. This data, instrumental for the Federal Reserve (Fed) in setting interest rates, suggests an improved path for the Fed to manage inflation without catalyzing a recession. Concurrently, the US gross domestic product (GDP) recorded a healthy 3.3% growth in Q4 2023.
As the sizable US federal debt's interest payment continues to escalate – estimated to cross $1.7 trillion by 2027, adjusted for inflation – analysts see this scenario as a factor improving Bitcoin's price potential. The belief is that the US dollar will continue to lose value over time, thereby indirectly benefiting Bitcoin.
Moreover, Bitcoin recently received a favorable nod from the conventional financial sphere. A JP Morgan report suggested that the outflows from the Grayscale GBTC spot Bitcoin ETF have likely peaked, implying that this channel's downward pressure on Bitcoin's price should largely be mitigated.
Showing promising signs, spot Bitcoin ETFs have recorded net inflows totaling $744 million over a 10-day period. Even with the continuation of Grayscale GBTC outflows, firms including BlackRock, Fidelity, Ark 21 Shares, and Bitwise are expected to counterbalance the situation.
Further optimism for Bitcoin investors stems from the reduced transaction costs on the Bitcoin network after a period of high demand when transactions higher than 30 sat/vB (approximately $1.90) were stuck in the mempool.
It is likely that the combination of these factors – the balance of Bitcoin options, favorable macroeconomic conditions, and mitigated risks from Grayscale GBTC outflows – contributed to Bitcoin's recent surge above $42,000.
