Bitcoin Price Drops Following US Inflation Data
On Tuesday, the Bitcoin price experienced a drop from $49,900 to $48,300 after the release of US inflation data. The data showed higher than expected inflation rates, leading to negative reactions in the traditional financial market. This shift in expectations for interest rate cuts affected Bitcoin as well.
Prediction Markets Reflect Lower Rate Cut Expectations
The prediction markets have adjusted their expectations for rate cuts in 2024 due to the higher CPI inflation rate. Instead of the previously expected 6 rate cuts, markets are now pricing in only 4. The probability of rate cuts in March and May is also decreasing.
Bitcoin Shows Strong Reaction and Reaches New Yearly High
Unlike the S&P 500, Bitcoin exhibited a strong reaction to the inflation data and quickly rose back to $49,900. Currently, BTC has surpassed $51,500, marking a new yearly high. This indicates positive short-term prospects for Bitcoin.
#1 Record-Breaking Bitcoin ETF Inflows
The surge in Bitcoin ETF inflows signifies a significant shift in investor sentiment and market dynamics. On Tuesday, net inflows into spot Bitcoin ETFs reached $631 million, with major players like Blackrock and Fidelity contributing to this influx. The sustained demand for Bitcoin is evident as these inflows represent new capital rather than a rotation from GBTC.
#2 Genesis GBTC Liquidation Concerns Alleviated
Fears of a potential market downturn triggered by Genesis’ planned liquidation of GBTC shares have been alleviated. The proposed Chapter 11 settlement involves in-kind repayments to creditors, reducing direct selling pressure on Bitcoin and aligning with the interests of long-term holders.
#3 OTC Demand Exceeds Supply
The strong demand for Bitcoin at OTC desks, where large institutional investors prefer to transact, indicates underlying market strength. This demand-supply imbalance suggests that significant players are accumulating Bitcoin, which is a positive signal for the cryptocurrency’s price outlook.
#4 Futures and Spot Market Dynamics
Analysis of futures and spot market indicators reveals technical factors signaling a bullish continuation for Bitcoin. The reset in open interest and the decrease in funding rates indicate that the market has absorbed the shock and is poised for upward movement.
Hot Take: Bitcoin’s Potential Rally Supported by Strong Factors
The combination of record ETF inflows, eased concerns over GBTC liquidation, strong OTC demand, and favorable futures and spot market dynamics presents a compelling case for Bitcoin’s potential rally. Expert insights and market data further support the growing investor confidence in Bitcoin’s future performance.
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