Overview
Bitcoin’s price experienced significant fluctuations in January. In the beginning, the price experienced a significant increase, reaching close to $49,000, due to the excitement surrounding the launch of spot Bitcoin exchange-traded funds (ETFs). However, it later declined as the Grayscale Bitcoin Trust (GBTC) faced substantial liquidations. On a positive note, it appears that GBTC’s outflows have been decreasing in recent days. Traders or investors are expected to gradually shift their attention from the Bitcoin ETF flows to the upcoming halving in April.
Fundamental Updates
Let’s delve into the significant developments shaping the crypto market landscape:
- FTX will reimburse customers but not restart the exchange:FTX, the cryptocurrency exchange that is no longer operational, has clarified that its restructuring plans do not involve a complete restart of the company. Instead, the main objective is to ensure that all customers are fully reimbursed.
- During a Jan. 31 hearing in the United States Bankruptcy Court for the District of Delaware, FTX attorney Andy Dietderich, representing law firm Sullivan and Cromwell, expressed cautious optimism about the exchange’s ability to fully repay users and creditors. However, he emphasized that this was an objective and not a guarantee. According to his statement, despite extensive efforts, there are no intentions to relaunch FTX, also known as FTX 2.0, under the current Chapter 11 bankruptcy plan.
- Visa allows crypto debit card withdrawals in 145 countries: Global payment giant Visa is stepping up its efforts to encourage the use of cryptocurrencies by opening up yet another way to convert cryptocurrency to fiat money without utilising a centralised exchange. The companies announced on January 30 that Visa, in collaboration with Web3 infrastructure provider Transak, will launch cryptocurrency withdrawals and payments via the Visa Direct service.
- With the help of this new integration, users may now withdraw cryptocurrency like Bitcoin straight to a Visa debit card from a wallet like MetaMask. The integration is instantaneously available and allows users to convert cryptocurrency to fiat and make payments at 130 million merchant locations that accept Visa. Users from 145 countries can swiftly convert at least 40 cryptocurrencies to fiat without centralised exchanges through the agreement. Countries such as Cyprus, Malta, Singapore, Turkey, Portugal, and the United Arab Emirates are supported. This advances cryptocurrency adoption to the mainstream.
Key Data Points
- Total market capitalization: The total market capitalization of the crypto market is currently around $1.7 trillion. This is a net $70 Billion change from last week.
- Bitcoin dominance: Bitcoin dominance, which tracks the percentage of the total market capitalization that is held by Bitcoin, is currently at around 48.8%. This is 1.45% up from last week.
- ETH dominance: ETH dominance, which tracks the percentage of the total market capitalization that is held by Ethereum, is currently at around 16.1%. This is 1.8% down from last week.
Bitcoin Price Analysis:
Bitcoin surged above $42,500, but the bulls were unable to sustain the momentum and push the price above $43,300. The bears attempted to lower the price below $41,500, but the bulls kept their position. This shows that the buyers are attempting to turn the $41,000 into support. The bulls will once again attempt to push the price beyond $43,300. Alternatively, if the price falls below $42,000, it will indicate that bears are actively selling above the threshold. The pair may thereafter trade in a narrow range between $40,000 and $43,000 for some time.
BTC Technical Indicator:
Macro Updates:
- The Federal Reserve has maintained interest rates at their current level for the fourth consecutive meeting. However, they have expressed openness to potentially lowering rates in the future.
- Fed Chair Jerome Powell, on the other hand, dampened expectations by indicating that a rate cut in March is improbable. The Federal Open Market Committee of the central bank stated that it will only consider reducing the target range once it is more confident that inflation is steadily moving towards 2%.
- Powell highlighted the importance of gathering additional data to validate the decline in inflation. The unanimous decision to keep rates unchanged was made, with the Fed restating its commitment to reduce its balance sheet by up to $95 billion per month.
- The central bank is getting ready to initiate detailed discussions regarding the balance sheet during its March meeting. The decision made by the Fed showcases a prudent approach in light of the uncertainties surrounding the economic outlook and the importance of addressing inflation concerns.
Bitcoin returns were 4.8% for this week. The Alpha Blue Chip Focused Strategy returns were 0.25% during the same period (26 January -01 February). The Top Cap Digital Assets Strategy and Arbitrage Opportunities & Balanced Strategy returns were 2.3% and -1.11%, respectively.
