Bitcoin recently rose above $42,000 traded under $40,000 for several days. This market recovery is believed to be the result of several factors including recent revelations about the US economy.
Macroeconomic factors that contributed to the recent Bitcoin spike
The price index for personal income expenditure (PCE), a leading inflation indicatorwas released on January 26 and reported turned out lower than expected. This suggests that inflation in the United States is cooling, and experts predict that the Federal Reserve is likely to scale back its aggressive monetary policy.
The Fed’s aggressive stance is known to have a positive effect negative effect on the price of Bitcoin and the broader crypto market. As such, this recent development is positive and something that could have prompted investors to double down on their investments in the flagship cryptocurrency, causing a price increase.
In the meantime, facts from the US Treasury Department recently showed that the country is in crisis debts of all times of $34.1 trillion. While this has raised concerns about the impending crash of the US dollar, it has also presented Bitcoin and other cryptocurrencies as a refuge to hedge against the possible devaluation of the national currency.
Interestingly, several financial analysts including renowned economist Peter Schiffhave continued to predict the impending crash of the US dollar. In light of this, financial author Robert Kiyosaki has urged everyone to invest in Bitcoin to avoid becoming poorer as a result of the government’s actions.
Another factor that has likely contributed to Bitcoin’s recent rise is the expiration of monthly BTC options contracts on Deribit. The expiration outcome more than likely played a crucial role in Bitcoin’s rally, considering that CryptoQuant CEO Ki Young Ju had established the derivatives market as responsible for Bitcoin’s recent decline.
BTC price jumps after downtrend | Source: BTCUSD on Tradingview.com
GBTC outflows slow for the fourth day in a row
GBTC in grayscale saw an outflow of just $255.1 million as of January 26, continuing a recent trend of reduced outflows from the fund. NewsBTC reported how the Bitcoin ETF had seen outflows of $515 million, $429 million and $394 million on January 23, 24 and 25 respectively.
If noted Through Bloomberg analyst James SeyffartJanuary 26 also happened to be the lowest outflow day for GBTC since the switch to a Discover Bitcoin ETF. This development suggests that investors in the fund may be cooling off from taking profits. It’s also important because Grayscale has contributed to the selling pressure that has plagued Bitcoin of late.
At the time of writing, Bitcoin is trading around $41,700, up more than 4% in the past 24 hours according to data from CoinMarketCap.
Featured image from U.Today, chart from Tradingview.com
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