Kategorie: Bitcoin News

Key Takeaways

• Bitcoin is up close to 50% from its lows, but is still down over two-thirds from all-time highs
• Some on-chain metrics show how much the rally pales in comparison to the prior fall 
• Positive news from the industry remains few and far between, as market prepares for latest interest rate policy, to be revealed at FOMC meeting Wednesday

Let us start with a riddle. How much profit/loss have you made if an asset you own rises by 47%, having previously fallen by 77%?

The answer is a gruesome 67% loss. 

That is the predicament facing Bitcoin investors who bought at all-time highs in late 2021. While markets have kicked off the year in scintillating fashion, it is important not to lose perspective. 

Humans have short memories, though. With Bitcoin up nearly 50% from the lows post-FTX collapse, crypto markets have that giddy feel about them again. It’s amazing what hope can do for people, huh? And by hope, I mean hope that interest rates will come down again.

Federal Reserve controls the Bitcoin price

I wrote a piece last week about how this latest rally, if it shows anything, simply proves once and for all how much Bitcoin is trading as an extreme risk-on asset. 

Bitcoin was crushed last year as central banks worldwide flipped hawkish for the first time in Bitcoin’s existence. With the cheap money of the last decade no longer available, and stout yields available on other investments such as T-bills, high-risk assets collapsed. 

The tech sector, also notoriously sensitive to interest rates, has been sacking employees left, right and centre – Meta, Salesforce, Twitter, Google, and the list goes on. 

This latest rally now comes as inflation begins to cool, with hope renewed that the pain of suffocating monetary policy will, in fact, one day come to an end. 

Market remains ravaged

While the picture undoubtedly looks rosier than this time two months ago, the crypto market is still in a world of pain. 

Bankruptcies are still flowing – see Genesis filing last week – while there are numerous other potential downside catalysts as the market still delves through Sam Bankman-Fried’s chaotic mess: DCG still present a lot of uncertainty, for example.

While prices have been running, there is no particularly good news to explain this rally. As I said, it’s all macro, with investors staring squarely at the Federal Reserve. 

A couple of charts paint a good picture of the pain still present in markets. Despite the recent upturn, the net realised profit marker, which is an on-chain metric calculated by comparing the price of recent coins moved to the price at which they previously moved, shows how much the recent rally pales in comparison to the scale of the fall last year. 

In truth, there is no need to complicate things. Despite the bluster of “hedge” narratives and “uncorrelated investment” that floated around through COVID, it is as clear as night and day that Bitcoin is trading off interest rate expectations right now. 

The below chart is perhaps the most important one in all of crypto over the last couple of years. 

That little bounce at the end could reverse very quickly depending on how things shake out at the upcoming Fed meeting. It could also do the opposite if things end up being more hawkish than the market has currently priced in. 

Either way, it is clear what is moving markets right now.

The post Crypto markets rallying but damage remains severe appeared first on CoinJournal.

• Digital asset investment products saw inflows of about $117 million last week, the biggest since July 2022.
• Bitcoin saw almost all of last week’s digital asset investment products inflows, with $116 of the total.
• Total assets under management (AUM) rose $28 billion, roughly 43% from inflow lows recorded in November.

Bitcoin saw the most fund inflows this past week, with the benchmark cryptocurrency accounting for nearly all of the weekly inflows.

According to a weekly report digital asset manager CoinShares shared on Monday, crypto asset investment products recorded inflows of $117 million. It was the biggest week for inflows across digital asset investment products since July 2022.

Bitcoin products saw inflows of $116 million

Bitcoin accounted for nearly $116 million of the total digital assets products inflows. And as Bitcoin price rose above $23,000, inflows into Short Bitcoin products represented $4.4 million of weekly totals. 

In other cryptocurrencies, inflows into Ethereum were $2.3 million and $1.1 million for Solana. 

However, multi-asset investment products saw a ninth consecutive week of outflows with $6.4 million. Binance and XRP also saw outflows of around $400,000 and $200,000 respectively.

The spike in inflows pushed total assets under management (AUM) to over $2.8 billion, with the metric up by 43% from its November low. Investment products also saw an improvement in terms of weekly volumes.

Per the CoinShares report, $1.3 billion was traded, up 17% compared to the year-to-date average. The volume was also higher compared to the average of 11% for the broader crypto market.

In terms of various regions, Germany saw about 40% of the inflows for approximately $46 million, while Canada, the United States and Switzerland saw the next three largest inflow batches with $30 million, $26 million and $23 million respectively.

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• Bitcoin addresses in profit is at a 9-month high of 30+ million.
• More unique addresses in profit were last above 30 million in early April 2022.
• Non-zero addresses also hit a 1-month high while addresses with 0.01+ BTC is at an all-time high.

The number of Bitcoin addresses that are currently in profit has reached a 9-month high, on-chain data shared by crypto platform Glassnode shows.

Per the metric, the percentage of unique addresses with Bitcoin funds in profit were 30,081,429 on Monday morning. The figure is a 7-day moving average measure and shows the current value of BTC in the wallets compared to the average buy price.

Therefore, these 30 million plus BTC addresses currently hold coins that were valued lower at the time of their purchase when compared to their current value.

At the time of writing, Bitcoin’s addresses in profit (7-day moving average) sat at a 9-month high after Bitcoin’s latest price action. The last time these many BTC addresses were in profit was in April-early May 2022 – with this happening as the events of Terra and Three Arrows Capital collapse helped to push prices below $40k.

Bitcoin eventually sank to lows of $15,600 in November amid the FTX-triggered sell-off that likely saw more people buy Bitcoin.

Now BTC is up more than 40% in 2023 and is currently above the $23,000 price level, helping add over 7 million more unique addresses into the profitable bracket as prices began to soar in January.

Meanwhile, the number of non-zero addresses has also increased, reaching a 1-month high of over 43 million. Indeed, the number of addresses with 0.01+ coins has recently hit an all-time high of 11,484,618, according to on-chain data Glassnode shared early Monday.

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• Bitcoin price declined slightly on Monday after nearing the resistance at $24,000.

• Macro factors will be the key drivers for Bitcoin and other asset prices.

• Consumer confidence, Fed decision, and NFP data will be in focus.

Bitcoin price pulled back slightly on Monday as investors started focusing on the key economic data from the US and the upcoming Fed decision. The BTC price was trading at $23,125, which was a few points below this year’s high of near $24,000.

Fed decision and NFP data

Macro data and events will be the key things that will drive the price of Bitcoin – and other assets this week. On Tuesday, the Conference Board will publish January’s consumer confidence data. This is an important figure that is watched closely by investors and policymakers because of the vital role that consumer spending plays in the economy. Economists expect that confidence continued rising in January as inflation eased.

The US consumer confidence data will be followed by the first FOMC decision of the year. With inflation easing and stocks and crypto prices rising, analysts believe that the Fed will deliver the second consecutive 0.50% hike. It will be extremely hawkish in a bid to reduce the enthusiasm among investors and traders.

In theory, an extremely hawkish tone will be bearish for the price of Bitcoin. Historically, crypto prices tend to rally in periods of easy money policies. However, in reality, there is a possibility that Bitcoin will rise even if the Fed sounds hawkish. That’s because investors may not believe the tone of the FOMC officials.

The Fed will likely guide to two more 0.50% rate hikes followed by a pause on interest rates as it seeks to lower inflation.

Finally, Bitcoin price will react to the latest non-farm payrolls (NFP) scheduled for Friday this week. These numbers will be important because they will guide the Fed in making its future decisions. Strong jobs numbers mean that the bank will continue sounding more hawkish in the coming meetings. 

Bitcoin price prediction

BTC/USD chart by TradingView

The BTC price has been in a strong bullish trend in the past few weeks. It has formed an ascending channel shown in black. The coin has moved above all moving averages. Further, it has moved above the important support at $21,615, the highest point on January 18. 

Therefore, there is a possibility that Bitcoin will pull back slightly ahead of the Fed decision and then rebound after the decision. As such, the coin could retest the support at $22,000 and then rise to $25,000.

The post Bitcoin price prediction ahead of Fed decision, NFP data appeared first on CoinJournal.