Cryptocurrencies: new rallies soon?

31 January 2024 - 13:00

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Bitcoin price quietly recovers as outflows from some of the most followed BTC trusts on the market ease. What does it mean?

Cryptocurrencies: new rallies soon?

An almost disturbing silence seems to envelop the world of cryptocurrencies in these latest sessions, in stark contrast to the previous weeks of strong tension, when the SEC approved 11 spot Bitcoin ETFs. Following the issuance of these ETFs, there has been a marked sell-off in the decentralized market, accompanied by a significant decline in interest.

Meanwhile, Bitcoin (BTC) has recovered, albeit modestly, some of the ground lost after mid-January. According to the principle that "Nothing happens by chance in the markets", the question arises: what could this silent recovery mean? Is it possible that Bitcoin could suddenly return to yearly highs?

Grayscale’s Strange GBTC Outflow: What Does It Mean?

To better understand the current situation in the cryptocurrency market, it is useful to examine developments in the new Bitcoin Trust market. Taking the Grayscale Bitcoin Trust (GBTC) fund as an example, we note that in recent days there has been a continuation of outflows, although they appear to have reduced. According to BitMEX Research, the fund’s total outflows still reached $5 billion.

Many try to interpret these movements as indicators of market strength or weakness. However, it is important to note that an outflow from ETFs does not necessarily correspond to a decline in expectations regarding the price of Bitcoin, just as the opposite is not automatically true. Trusts are merely investment vehicles and are not a representative sample of the entire market.

An interesting aspect is the relationship between convenience and market behavior. After the collapse of FTX, the Grayscale Trust saw a sharp discount, attracting the attention of hedge funds. With speculation on the possible approval of a Bitcoin ETF by the SEC increasing, many bets have been made in various segments of the market, both decentralized and traditional. The actual approval of the ETF provided a convenient opportunity to realize the accumulated profits.

This shows how, when analyzing certain variables, it is essential not to hastily interpret them as indicators of general market sentiment. Despite the recent declines, which may be technical in nature, the market could maintain a positive tone, attracting new capital inflows, especially following the recent declines.

BTC/USD: a nice recovery, done quietly

On Friday 26 January, approaching the last weekend of the month, the price of BTC/USD began a first attempt at recovery. This movement continued discreetly over the weekend. After a marked decline, which took BTC from around $48,000 to almost $38,000, the price of BTC/USD rose again, touching the $40,000 threshold again and reaching around $42,000. This trend indicates a certain degree of optimism on the part of investors who have supported Bitcoin despite the significant breakdown to the $40,000 level.

Source: Teletrader

Original article published on Italy 2024-01-29 16:48:00. Original title: Criptovalute: presto nuovi rialzi?

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