Why is the Bitcoin price stagnant?
Written by Yashu Gola, Cointelegraph
Translation: Shan Ouba, Golden Finance
The price of Bitcoin is stuck in consolidation and the market sentiment is in a seesaw state. On the one hand, the increase in institutional investment has brought optimism, while on the other hand, concerns about potential selling by miners have put pressure on it.
Bitcoin (BTC) prices are range-bound, reflecting the uncertainty and indecision among market participants following last week’s approval of a spot Bitcoin ETF.
As of January 16, the BTC price has been hovering between $41,550 and $43,000. This stagnation has continued, despite a brief breakout above $49,000 earlier this month before falling back to the current range.
The flattening of Bitcoin’s price can be attributed to several factors discussed below.
Reaction to Bitcoin ETF Approval Muted
Bitcoin’s breakout above $49,000 appeared to come after the U.S. approved 11 spot BTC ETFs, including those from BlackRock and Fidelity. However, the price has since fallen by about $10%, which was expected by some analysts.
This suggests that the market has largely priced the approval in. The lack of a significant rebound after the ETF approval suggests that investors have adjusted their expectations accordingly.
Bitcoin market dominance declines
Bitcoin’s market dominance index fell from a local high of 54.56% to 51.14% in a week.
Ethereum rises
The main reason for the decline in Bitcoin dominance was ETH's 8.5% rise, with other altcoins also seeing similar gains. This suggests that traders may have moved funds from Bitcoin to the altcoin market after the ETF approval, believing that the risk-reward ratio is better elsewhere, especially with the upcoming Ethereum ETF.
Fundamental outlook mixed
An important positive market indicator for Bitcoin is the increasing capital inflows into Bitcoin investment funds, especially amid growing excitement about spot Bitcoin ETFs.
These Bitcoin funds attracted $1.25 billion from institutional investors in the first two weeks of 2024, almost as much as the $55% for the entire previous year. This influx highlights the strong confidence that institutional players have in the long-term value and potential of Bitcoin.
However, offsetting this bullish fundamental are the miners.
There are growing concerns that the increase in Bitcoin mining hash rate may cause miners to sell their Bitcoin faster. Some expect Bitcoin mining costs to rise sharply after the halving in April 2024, which could put pressure on Bitcoin prices.
So far, BitcoinXiaobai NavigationBitcoin miners have moved more than $1 billion worth of Bitcoin tocryptocurrencyexchange.
Koreans buy, Americans sell
The current sideways movement in Bitcoin prices coincides with a clear trend of South Korea increasing purchases to offset U.S. selling. The Kimchi Premium Index is a measure of the price of Kimchi in South Korea and globally.cryptocurrencyexchangeAn indicator of the difference in Bitcoin prices between the United States and China shows that Bitcoin is trading at a premium of 3-4% in South Korea.
Meanwhile, the Coinbase Premium Index, which compares the price of Bitcoin in USD on Coinbase Pro to the price of USDT on Binance, has turned negative, indicating that there are more U.S. sellers than buyers.
Neutral RSI
From a technical perspective, Bitcoin’s range-bound price action is consistent with its daily relative strength index (RSI) returning to neutral territory.
When both are observed together, it usually indicates that market sentiment is reaching a balance, with neither the bulls (buyers) nor the bears (sellers) in control.
Investors may wait for more information before making major moves, leading to lower volatility and fewer directional price swings.
The article comes from the Internet:Why is the Bitcoin price stagnant?
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