Bitcoin Hits Two-Week High, Market Experts Caution on Dwindling Liquidity
Summary:
On January 30, Bitcoin (BTC) hit a two-week peak but experts warn about diminishing liquidity in order books. Bitcoin's increase has brought the market to a $43,853 high on Bitstamp, a change credited to reduced outflows from the Grayscale Bitcoin Trust (GBTC). Hoping to approach January's highs of $48,000, analysts highlight the absence of bids just below the spot price and cite the upcoming decisions from the Federal Reserve on benchmark interest rate changes as a potential element of volatility.
On January 30, Bitcoin (BTC) achieved a two-week peak, which led market experts to caution about the diminishing liquidity of order books. Market data from Cointelegraph Markets Pro and TradingView revealed that Bitcoin's price rise carried the market to a $43,853 high on Bitstamp. Following this surge, Bitcoin's price underwent consolidation, mainly focusing around $43,500 after the start of the trading day on Wall Street. This displayed Bitcoin's recovery strategy since the weekend, with an over $5,000 increase compared to the two-month low that was seen recently. This rebound is credited to the significant reduction in outflows from the Grayscale Bitcoin Trust (GBTC), a newly established spot Bitcoin ETF. Despite this, Bitcoin bulls met with strong resistance at $43,800 within the weekly range.
Popular traders and analysts, Rekt Capital and Skew, have provided some insight towards this situation. Rekt Capital explains that Bitcoin is striving to contradict its Weekly Bearish Divergence which seemingly played out on the dip last week. Skew suggests that a substantial increment in buyer confidence will required to approach the range highs of $48,000 that were previously seen in January. He continues by stating that the number of bids are fairly slim in the order book, further implying that the path to a downfall might be wide open due to the absence of bids immediately below the spot price.
Material Indicators also spoke about the present liquidity situation, suggesting that it might be correlated to the upcoming Federal Reserve’s decision on benchmark interest rate changes set for January 31. According to Keith Alan, co-founder of Material Indicators, the lack of liquidity combined with the Fed's remarks about the economy could cause some problems for Bitcoin traders. He believes that this could cause some market volatility, especially if the Fed does not implement rate cuts as swiftly or deeply as expected by the market.
Reports from CME Group's FedWatch Tool have shown that the chances for rate cuts starting in March at the next Federal Reserve meeting are currently below 40%. It's crucial to remember that investing and trading comes with inherent risks and it's strongly advised to conduct thorough research before making financial decisions.
Published At
1/30/2024 6:46:26 PM
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