Monat: Februar 2023

• Bitcoin and crypto prices fell as markets reacted to January PCE data.
• The Fed’s favourite inflation measure came in hot, jolting markets lower with S&P 500 declining nearly 1.4% and Dow dropping about 400 points.
• Crypto analyst Rekt Capital says BTC price remains in positive territory as long as bulls hold support above $23k.

Bitcoin price continues to struggle after the rejection from the $25k resistance, but today’s dip comes as the market reacts to hotter-than-expected Personal Consumer Expenditure (PCE) data.

As stocks got whacked on Friday, with the S&P 500 falling nearly 1.5% and the Dow Jones Industrial Average dropping 400 points, BTC price retreated under $24k to hit lows of $23,130 across major exchanges.

Crypto, Wall Street drops on CPE data

The CPE is the Federal Reserve’s most preferred inflation measure and sentiment has shifted on the latest data release as investor jitters fill up again. 

The Fed uses the CPE price index to assess how sharply prices have risen within the US economy, and data shows prices spiked 0.6% in January and 5.4% year-over-year. Core CPE also came in hot, at 4.7% against the forecast 4.3% to suggest inflation remains an issue.

“Inflation remains too high. We’re going to have to do more to get back to 2%,” said Cleveland Federal Reserve President Loretta Mester. “I see a little more impetus in the inflation measures than my colleagues. We’re going to have to bring interest rates above 5% and hold there for a time,” she added during an interview with CNBC.

Bitcoin price outlook

The reaction on Wall Street also cascaded into the crypto market, with BTC price declining below a key support line recently highlighted as a “confluent support zone.” The uncertainty around the Fed’s interest rates saw most stocks scorched in early trades, a scenario also replicated in crypto with Ethereum dropping below $1,600.

For Bitcoin’s short-term price outlook, popular crypto trader and analyst Rekt Capital says bulls could remain in control if BTC holds above $23k. However, a bearish outlook would materialize if price breaks lower.

“BTC Weekly retest of the confluent area that is the Lower High and Monthly Range High resistance is now in progress. Price needs to hold here for the retest to be successful. However, Weekly Close below this area would be a bearish sign,” the analyst noted.

A failed #BTC Weekly retest of ~$23400 as support would mean that price remains inside the Monthly Macro Range

Let’s see how the Monthly Closes

1M Close above ~$23400 -> likely range breakout

1M Close below -> $BTC stays in & range & could dip lower in range#Crypto #Bitcoin pic.twitter.com/xTAqH7pVlm

— Rekt Capital (@rektcapital) February 24, 2023

The post Bitcoin bounces off $23k support as stocks fall on hot PCE data appeared first on CoinJournal.

Key Takeaways

• 11.8% of the Bitcoin supply is currently on exchanges, the lowest mark since 2017
• Supply of Bitcoin on exchanges has been consistently falling since March 2020, when crypto bottomed ahead of the explosive pandemic bull run
• Originally, people pulled Bitcoin to participate in vibrant crypto ecosystem, with high volumes and activity and much scope for yield
• Today, volumes and interest have fallen, but pattern of Bitcoin fleeing exchanges has continued, albeit for different reasons
• Bitcoins leaving exchanges in recent months are likely due to fears over security and transparency, heightened after FTX collapsed

“Not your keys, not your coins”. 

One of the oldest sayings in crypto. And after a year that saw one of the biggest exchanges around shockingly gamble away customer assets in secret, many will wish they had paid it more attention. 

Now, people are listening. Although in truth, this has been happening all throughout the pandemic. The balance of bitcoins on exchanges is now down to 2.27 million – that is the lowest mark since March 2018, a month which saw “God’s Plan” by Drake being played on the radio over and over and over and over again. 

The mark is even lower when compared to the overall supply. There is currently 11.8% of the Bitcoin supply on exchanges. This is the lowest mark since December 2017. 

Crypto fans will remember December 2017 as the month that Bitcoin went absolutely bananas. I remember exactly where I was when I saw that Bitcoin had breached the $20,000 mark for the first time; it felt like a seminal moment. 

It marked the top, incidentally, with the orange coin at $7,500 seven weeks later. Within a year, it wasn’t far above $3,000. It was a long and barren bear market with fortunes not turning around until COVID hit in 2020. 

Where is the Bitcoin going?

I say “not your keys, not your coins”, but this isn’t the only thing driving the movement of coins off exchanges. 

As the above charts show, the Bitcoin supply on exchanges has been coming down since March 2020. This is also the month that COVID kicked off. Since I’ve been in crypto, I also believe it was the scariest time of all – Bitcoin plunged from close to $10,000 to $5,000 in a gruesome 48 hour stretch as markets around the world tried to figure out what exactly this COVID-19 thing was. 

But after this, the bull market kicked into gear. So, why has Bitcoin on exchanges been falling throughout this period?

The truth is, ironically, that it could be for the exact opposite of the matra behind “not your keys, not your coins”, at least in part. This is due to the rise of crypto lending platforms during the bull run – firms like Celsius, BlockFi, Voyager Digital and so on.

These platforms offered a nice yield on Bitcoin, and this attracted billions of dollars of inflows. Now, you may notice one thing about those names: today, they are all bankrupt. Which means that, obviously, coins currently leaving exchanges in recent months are for other reasons. 

So there could be a dual explanation here: during the bull run, coins were leaving exchanges for yield on centralised platforms. Or they were leaving exchanges for DEXs, or other destinations. Crypto was booming at this time; there were no shortage of things to do or yield to earn. 

Today, however, volumes have been decimated. Looking at total value locked within DeFi, it is down to $50 billion, having been up to $180 billion in December 2021. That is a fall of 72%. Simply put, prices are down, volumes are down and interest in general is down. 

This fallen volume and interest have likely reduced the pull of Bitcoin off exchanges. But this drop may have been replaced by people pulling Bitcoin at a similar rate, but for an entirely different reason: to be secure, and to send to cold storage. You can thank Sam and the various other scandals for this. 

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