BTC Price Opens Yearly to FOMC — 5 Things to Know in Bitcoin This Week
Bitcoin (BTC) makes a round trip to its yearly base and heads to the first monthly close of 2024 – what's next?
In a key week for US macroeconomic policy, BTC price action continues to hover around $42,000.
This sets the stage for a new phase of volatility to come – last month's high of $49,000 was seen, followed by a rapid loss of 20%.
Now, Bitcoin bulls are gearing up for a fight against the Federal Reserve and US political moves that could cause further turmoil for the crypto markets.
While the dust has settled on the launch of the first US-based Bitcoin exchange-traded funds (ETFs) – a topic of debate in their own right.
Under the hood, meanwhile, the fundamentals of the Bitcoin network are poised to shake off the impact of the $49,000 drop and move back up. Difficulty, for example, is predicted to increase by 4% in the coming days.
Cointelegraph looks at the main talking points that will impact Bitcoin and crypto market performance in February and beyond.
Bitcoin will come full circle by the end of January
Unlike others before him, the weekend has set a signal that can be applied to traders, BTC / USD hit $ 42,800 on Bitstamp, data from Cointelegraph Markets Pro and TradingView show.
This marked the highest level since January 18, and so far, Bitcoin is the highest in the first Asian trading session of the week.
BTC's latest price action forms part of the relief it entered after last week's reversal at $38,500. This was accompanied by misunderstandings among traders, some of whom remain – who warn that Bitcoin could easily hit new lows in the future.
Analyzing the current situation, popular trader Skew sees cautious optimism on lower timeframes. In his summary on social media X, he listed the area as $42,000.
Referring to the daily chart, he wrote, “It doesn't look that bad TB, but the establishment of a 1H/4H trend will be important to communicate with this mid-range level.”
Skew added that he is looking for positive signals on Bitcoin's Relative Strength Index (RSI) on the hourly timeframe, especially in a rebound and hold above the 50 midpoint.
Meanwhile, the weekly close has bought above $42,000, giving BTC/USD an increase of around 1.1% compared to the previous close.
For Skew, the total of the past two months, from their swing high and subsequent low, forms a sustainable range.
“Technically still the same weekly range and two failed swings (no expansion), which ended up being trapped by liquidity,” he commented.
However, after BTC/USD faced the risk of breaking out of this weekly range, the improvement was promising for partner and analyst Rect Capital.
#BTC
As the new weekly close approaches, Bitcoin looks set to salvage its weekly range $BTC #Crypto #Bitcoin pic.twitter.com/ayJzi5G5tW
— Rekt Capital (@rektcapital) January 28, 2024
Fed rate decision ahead of rocky macro week
Despite renewed turmoil in China's markets and problems with property giant Evergrande, the topic on everyone's minds this week is the US decision on both interest rates and other economic policy issues.
The first is the action of the US Federal Reserve and will be revealed at the Federal Open Market Committee (FOMC) meeting, which ends on January 31.
Inflation has been easing in consecutive months with macro data releases in line with the Fed's expectations.
Markets have been anticipating that this month's FOMC meeting will bring few surprises, instead interest rate cuts will begin at the next March meeting.
According to data from CME Group's FedWatch Tool, there is a nearly 98 percent chance that rates will remain at current levels after Jan. 31.
“Hold for the action of the week ahead,” summed up the trading input Kobeisi's letter in its weekly macro data releases.
Key events this week:
1. JOLTs Job Information – Tuesday
2. CB consumer confidence – Tuesday
3. Fed's interest rate decision – Wednesday
4. ISM Manufacturing PMI data – Thursday
5. January Jobs Report – Friday
6. ~20% of S&P 500 companies report earnings
Close to the action…
— Kobeissi Letter (@KobeissiLetter) January 28, 2024
As Cointelegraph reports, the coming days will be more than inflationary. How the government handles other issues — notably regional bank stability — is also on the radar.
Earlier, Arthur Hayes, former CEO of the crypto exchange BitMEX, predicted a retreat of $ 30,000 for Bitcoin even if the banking crisis should return to the United States in the coming months. Treasury Secretary Janet Yellen argued that what they decide this week will be key.
Mining difficulty is set to maintain an all-time high.
The direction of the fundamentals of the Bitcoin network is clear again – and it's a “top only” issue.
The latest live estimates from statistical data source BTC.com make it difficult to grow by 4% in the next automatic correction – taking it to new all-time highs.
The correction erases the 3.9% decline seen two weeks ago amid uncertainty about ETF flows.
The amount of change can still vary widely depending on the price action between them, but the problem is currently about 73.59 trillion.
Equally resurgent is the hash rate, the estimated amount of processing power deployed to the Bitcoin blockchain, which has risen 10 percent in the past week alone.
Interestingly, the hash rate went down before the #Bitcoin price went down.
Hash volume has now increased by about 10% in the last 10 days. #Bitcoin is up 7% in the last five days. https://t.co/1x4HgJbQSc
— James Van Straten (@jvs_btc) January 28, 2024
The debate surrounding mining centers around the April block subsidy halving event, which will reduce the amount earned per block (excluding fees) by 50%.
Last week, a new study by financial cantor Fitzgerald warned that most major mining operations would face financial difficulties due to a halving of current profitability.
At the same time, on-chain analytics platform CryptoQuant put miners in “very low payout” territory due to declining spot prices and declining fee income.
This was the best since June 2022, added by the current Head of Research of CryptoQuant, Julio Moreno on X.
Spectators show in the Bitcoin market boom
Delving deeper into the significance of Bitcoin's recent reversal, James Van Straten, a research and data analyst at the firm CryptoSlate, brought up some common standards.
He stated that $38,800 is the total guaranteed price (RP) for Bitcoin speculators, known as short-term holders (STHs).
STHs are entities that have held BTC for 155 days or less, and the cost base has served as support over the past year.
Van Straten noted that as RP continues to trend higher overall, investor groups are generally paying more to acquire BTC.
“The last STH RP at $38.3k was the 2021 bull run and the price was $60,000,” he added with data from the chain analytics firm Glassnode.
This shows how durable this bull run is.
Cointelegraph reports that the pullback from $49,000 — itself Bitcoin's highest level since December 2021 — triggered a mass exodus among STHs, many of whom loaded up and recently bought the coins at a loss.
Crypto market sentiment near three-month lows
The past few weeks have seen sell-side pressure from some major players, notably the defunct exchange FTX.
Related: Bitcoin Region Consolidation Sets the Stage for SOL, AVAX RNDR and SUI
As Cointelegraph reports, this comes under threat to the Greyscale Bitcoin Trust (GBTC), an institutional investment vehicle that is now itself a space ETF.
As outflows from GBTC cooled last week, sentiment continues to hold barriers to BTC price recovery.
Sentiment in crypto hit a three-month low on January 24, according to data from the Crypto Fear and Greed Index.
Fear and Greed, albeit a lagging indicator, paint a picture of nervousness among investors as they see a high of 76/100 — a sign of an outbreak of “extreme greed” — ahead of the ETF's Jan. 11 launch.
For research firm Sentiment, that data signaled what it called “extreme excitement” around Bitcoin.
With the S&P 500 continuing to hit new all-time highs, Santiment considered whether crypto could play a catch-up game.
#Bitcoin sneaked over $42k today, although #altcoins aren't following suit (yet). The #SP500 made a new #AllTimeHigh yesterday, and the #power argument for #crypto is that $BTC and other major cryptocurrencies are about to ‘revert to the mean' and from
(Continued) pic.twitter.com/ifLxqKRpa7
— Santiment (@santimentfeed) January 26, 2024
“The cryptocurrency sector has lagged behind the stock markets, especially since January 17, when it started to turn in the opposite direction,” he argued.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
