Bitcoin price resilient above $41,800
The price of Bitcoin (BTC) has shown resilience in staying above the $41,800 support level, despite experiencing some volatility recently. On January 15, the price of BTC dropped by 3% to $41,690, marking the sixth time in less than a month that the $41,800 support level was tested. This has led traders to question whether this movement indicates strength and what could potentially drive a rally above $44,000.
Some analysts believe that the 9.1% correction in BTC price on January 12 was due to Bitcoin miners sending nearly $1 billion worth of BTC to exchanges, which is a six-year high. With Bitcoin’s hash rate increasing by 44% in the past six months, there is concern that miners may sell their coins at a faster pace, including their holding positions. CoinShares, a digital asset manager, predicts that the cost to mine one BTC after the April 2024 halving will surge to $37,800. This report suggests that Bitcoin miners’ outflows to exchanges may continue.
BTC correlation versus gold, stocks rises
Bitcoin’s price has shown a noticeable correlation to traditional assets such as gold and the S&P 500 stock market. In the past month, Bitcoin’s 50-day correlation to gold has been above 65%, while its correlation to the S&P 500 futures has been above 75%, indicating that macroeconomic drivers have affected both traditional assets and Bitcoin in a similar way. This correlation has remained high even after the spot Bitcoin exchange-traded fund (ETF) debuted on January 11, suggesting that the ETF has had little impact on Bitcoin’s price from a longer time frame.
Recent economic indicators have added to this correlation. Germany, Europe’s largest economy, announced a contraction in its gross domestic product for 2023, and the country’s economic ministry expressed concerns about recovery. In the US, inflation remains a source of concern, with the Consumer Price Index growing by 3.4% in November. These factors suggest that it may take longer than expected for central banks to reduce interest rates, causing investors to favor fixed-income investments. The prospect of trillion-dollar stimulus packages in the US, coupled with inflationary pressure, further limits central banks’ ability to lower interest rates.
Bitcoin futures data no longer bullish
Bitcoin futures data indicates a shift in sentiment among investors. While Bitcoin futures typically trade at a premium in neutral markets, the BTC futures premium has stabilized at 9%, below the neutral threshold. This suggests that investors are no longer expecting a short-term price pump for Bitcoin. Although this is not a bearish structure, which would require a premium below 5%, it does indicate a change in investor expectations for Bitcoin’s price.
The recent correction to $41,690 may have been triggered by Larry Fink, CEO of BlackRock, calling the spot ETF a “mere stepping stone to tokenization” of real-world assets. Fink’s comments may have affected the short-term price outlook for Bitcoin, as he stated that he does not believe it will ever become a currency but rather sees it as an asset class.
Factors behind potential BTC rally above $44,000
Traders are now looking for drivers that could potentially lead to a rally above $44,000 for Bitcoin. Some factors to consider include the resilience of the $41,800 support level, the impact of Bitcoin miners’ outflows to exchanges, and the overall macroeconomic environment. If these factors align favorably, it could provide the catalyst for a potential rally in Bitcoin’s price.
Bitcoin price correction: Understanding the drivers
The recent correction in Bitcoin’s price highlights the interconnectedness between traditional assets and Bitcoin. Factors such as Bitcoin miners’ actions, macroeconomic indicators, and investor sentiment all play a role in determining Bitcoin’s price movement. Understanding these drivers and their impact on Bitcoin’s price can help investors make informed decisions and navigate the volatility of the cryptocurrency market.
Disclaimer: This article is for general information purposes only and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect the views and opinions of Cointelegraph.
Analyst comment
Positive news: Bitcoin price resilient above $41,800
Short analyst response: Despite recent volatility, Bitcoin has shown resilience in staying above the $41,800 support level. Traders are now questioning whether this movement indicates strength and what could potentially drive a rally above $44,000. Factors to consider include miners’ outflows, macroeconomic indicators, and overall market sentiment. If these align favorably, it could provide the catalyst for a potential rally in Bitcoin’s price.
