Bitcoin is back above $43,000, just days after a quick recovery from less than $40,000 to $42,000. This trend reversal is believed to be due to some recent developments that have painted a bullish story for the economy flagship crypto token.
The grayscale effect is decreasing
Bloomberg analyst James Seyffart recently highlighted how BlackRock’s Spot Bitcoin ETF, IBIT, went toe-to-toe with Grayscale’s GBTC on day 12 of trading. This happened to be the closest IBIT or a Spot Bitcoin ETF had gotten to GBTC, which holds the “liquidity crown.”
This represents a positive development for Bitcoin’s price as the volume of IBIT, and more of the inflows, may suppress the volume of GBTC, which was largely outflows. The outflow recorded by GBTC after the Spot Bitcoin ETF conversion, this had partially contributed to the flagship crypto token falling below $40,000.
However, GBTC investors appear to be cooling off from the profit-taking that had overwhelmed the fund as it has now seen reduced outflows for the fifth day in a row. BitMEX research revealed in an X (formerly Twitter) post that GBTC had seen an outflow of $192 million on January 29.
That figure also represented GBTC’s lowest daily outflows to date and the first time it has seen daily outflows below $200 million. This recent trend of reduced outflows has apparently provided some form of relief to the Bitcoin market, considering that Grayscale’s selling pressure has decreased.
Meanwhile, the Bitcoin bulls have also ensured that Bitcoin did not remain in the background for too long. Facts from IntoTheBlock showed that Bitcoin whales have increased their BTC holdings by 76,000 BTC since the beginning of this year. That suggests there was reasonable demand for the crypto token even as Grayscale continued to shed its BTC holdings.
BTC price holding strong above $43,000 | Source: BTCUSD on Tradingview.com
Other Factors Behind the Bitcoin Recovery
NewsBTC recently reported how macroeconomic factors such as the latest inflation data and record-high US debt had contributed to Bitcoin’s recovery to $42,000. These factors still play a role in Bitcoin’s current momentum, which has seen this rise above $43,000.
In addition, the Federal Open Market Committee (FOMC) meeting is scheduled for January 30 and 31, and the CME FedWatch Tool will predicts that there is a 97.9% chance that the interest rate will remain the same. Rates tend to remain stable then a walkare good for the market.
This also provides a plausible explanation for the recent rise in Bitcoin’s price, as investors are already positioning themselves in anticipation of the likely outcome of the Feds meeting. Another event that these investors will position themselves for is the Bitcoin halving.
Market information platform Santiment recently unveiled that the supply of Bitcoin on the exchanges continues to decrease, with BTC holders moving their tokens to cold storage. This move could very well anticipate the likely gains Bitcoin is expected to post once the Halving takes place.
Chart from Tradingview.com
Disclaimer: The article is for educational purposes only. It does not represent NewsBTC’s views on buying, selling or holding investments and of course investing involves risks. You are advised to conduct your own research before making any investment decisions. Use the information on this website entirely at your own risk.
