Bitcoin Protects Key Price Level 6 Times – Is $44K Next?
Bitcoin derivatives have reversed, with the bullish momentum seen last month now gone, but Bitcoin's (BTC) correlation with traditional markets has risen sharply.
The price of Bitcoin is resistant to more than 41,800 dollars
BTC price experienced moderate volatility at the end of January 14th when the price dropped to $41,690, up 3% on January 15th.
Related: BTC speculators drop $5B – 5 things to know in Bitcoin this week
Interestingly, this is the sixth time the $41,800 support has been tested in less than a month. Traders are wondering if the latest move is a sign of strength and what could be the drivers for a rally above $44,000.
Some analysts on January 12 sent a 9.1% BTC price adjustment to Bitcoin miners' flows, with CryptoQuant reporting that nearly $1 billion in BTC price exchanges was sent – a six-year high.
Investors believe that Bitcoin's hash rate, which has increased by 44 percent in the past six months, is forcing miners to sell coins at a faster rate, including their holdings.
Digital asset manager CoinShares predicts that the cost of 1 BTC will rise to $37,800 following the April 2024 halving.
The CoinShares report comprises 19% of the current Bitcoin mining hashing power, and only five of the 14 companies under analysis remain profitable after the reduction. Basically, traders have reason to believe that Bitcoin miners will continue to pour into the exchange.
BTC ties to gold, stocks rise.
The price of BTC was relatively flat in the 30 days ending January 15, meaning that the position was at least slightly lower than the long-term limit that the Bitcoin Exchange-Traded Fund (ETF) debuted on January 11.
Interestingly, both S&P 500 futures and gold futures rose 0.5% in US dollar terms over the same period. In fact, for the past month, Bitcoin's 50-day correlation with the US stock market and gold has been high.
Note how Bitcoin's 50-day price correlation since November has been over 65% and relative to S&P 500 futures has been over 65% for the past three weeks.
Those numbers vary greatly over time, but recent data signals that macroeconomic drivers have similarly impacted traditional assets and Bitcoin.
Related: Bitcoin and Relationships – Exploring the relationship between BTC, gold and the Nasdaq
For example, Germany, Europe's largest economy, announced on January 15 that it would contract an adjusted 0.1% of GDP in 2023 compared to the previous year. More importantly, Germany's economy ministry noted that “current early indicators do not point to a rapid economic recovery.”
In the US, inflation remains the biggest source of concern after the consumer price index rose 3.4% in November. Rubella Faruqi, Chief Economist at High Frequency Economics, said, “These readings support the view that the US Federal Reserve's policy should remain restrictive for some time.
In short, investors have realized that it may take longer than expected for central banks to effectively cut interest rates, prompting investors to favor fixed income investments.
Related: Information on Chains in a Volatile Market – How Traders Stay Ahead of the Curve
On the one hand, the US is expected to issue trillions of dollars in stimulus packages due to its budget deficit. Inflation, on the other hand, limits the ability of central banks to lower interest rates.
Bitcoin futures are no longer bullish.
To understand whether Bitcoin investors have reversed, one needs to analyze the BTC futures premium, known as the base rate.
Professional traders prefer monthly contracts due to the lack of funds. In independent markets, these instruments trade at a premium of 5% to 10%, given their extended settlement period.
The data shows that the BTC futures premium is stable at 9% below the neutral threshold – in contrast to the bullish momentum that lasted until January 12.
While it is far from a bearish structure that requires an annual premium of less than 5%, it becomes clear that Bitcoin investors do not expect the price to increase in the short term.
One may never know exactly what triggered the correction to $41,690, and it may have something to do with BlackRock CEO Larry Fink calling the spot ETF a “stone to separate” from real-world assets, which is certainly not beneficial for BTC. Price in a short time.
Fink also recently commented on Bitcoin:
“I don't believe it will ever be money. I believe it is an asset class.”
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
