Bitcoin Aims to Maintain $42K Margin Amid Halving Event and Market Volatility
Summary:
The first week of February sees Bitcoin (BTC) attempting to maintain its value above $42,000 amid concerns over the upcoming halving event. Speculations about pre-halving price reactions vary considerably, ranging from setting a new all-time high to no substantial price growth until months following the event. Amid this, notable shifts have been identified in Bitcoin's whale population, suggesting possible significant movements in the near future. Additionally, escalating volatility in China's equities market and uncertainties over the Federal Reserve's future financial policies add elements of risk and turmoil. On another note, BlackRock and Fidelity hold the majority of Bitcoin stored by the recently released US spot Exchange-Traded Funds.
As we commence the first full week of February, Bitcoin (BTC) is striving to prevent a fall under $42,000, while exhibiting a sluggish increase with only a 0.6% growth in January. Despite Bitcoin proponents constantly trying to push the coin past the lower to mid-$40,000 region, they lack the strong momentum required to hurdle the selling pressure and test the limits of this range.
The forthcoming halving event, which is about two-and-a-half months away, predicts a rough road ahead, with varying expectations about how the price will respond to this event. Some anticipate that Bitcoin could shatter its local resistance and set a fresh all-time high prior to mid-April. However, other views propose that no significant price activity will take place till a few months post the halving.
Meanwhile, the ever-present macroeconomic risks loom in the background, coupled with the emerging chaos in the Chinese equities market. Following the surprising data from the United States last week, questions about the evolution of the Federal Reserve's financial policies, especially about the timing of interest rate reductions, have arisen.
Bitcoin's latest weekly closing was around $42,550 on Bitstamp and is the second highest of 2024 so far, but BTC/USD tried to sell off shortly after, retouching$42,200 twice before bouncing back, standing around $600 higher at present, as per data from Cointelegraph Markets Pro and TradingView.
Notably, despite Bitcoin experiencing consolidation, the weekly Relative Strength Index (RSI) has "reset" to lower levels. Furthermore, signs of returning volatility are suggested by the tightening of Bollinger Bands, which indicate incoming price expansion.
Predictions for Bitcoin's reaction surrounding the block subsidy halving event, scheduled for April 18, are remarkably diverse, varying from no significant price gains until several months after the event to setting a fresh all-time high before the halving. Regardless of the predictions, the psychological impact halving has on the market is being critically monitored.
United States-based asset management giants BlackRock and Fidelity hold three-quarters of the Bitcoin amassed by the newly released US spot Exchange-Traded Funds (ETFs), excluding the Grayscale Bitcoin Trust.
The global Bitcoin supply in ETF products has now surpassed 3%. Meanwhile, the Chinese equities market is causing volatility, with equities hitting five-year lows and the CSI 100 index crashing by 8%, prompting a halt in trading for 30% of its stocks.
Notwithstanding the static price landscape of BTC, large-scale investors or "whales" seem to be preparing for a possible change. Research from the firm Santiment reveals a substantial shift in the composition of Bitcoin's whale population over the past week, indicating that major movements may be on the horizon.
Published At
2/5/2024 12:04:50 PM
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