Bitcoin Holds Steady Amid Inflation Fears, ETF Interest Critical for Future Stability
Summary:
Bitcoin maintains a steady $52,000 value amid U.S macro data exceeding expectations. The Producer Price Index added to the U.S inflation worries, prompting fears of an eased fiscal policy by the Federal Reserve. With the Bitcoin rate rising to its highest since November 2021, experts focus on the significance of the 21-period exponential moving average. Meanwhile, U.S spot-Bitcoin exchange-traded funds see substantial inflows, but a decrease in interest could expose Bitcoin to a significant retracement.
Bitcoin (BTC) maintained a value of $52,000 as the U.S markets opened on February 16, despite the latest U.S macro data surpassing expectations. The BTC's price remained unchanged heading into the final traditional finance trading session of the week, according to data from Cointelegraph Markets Pro and TradingView.
The Producer Price Index (PPI) for January, following the Consumer Price Index (CPI) release two days earlier, has exacerbated the U.S inflation issue. The year-on-year PPI was recorded at 0.9%, slightly lower than the previous month but still 0.3% above market expectations. The combined impact of this and the high CPI has made markets more apprehensive about the Federal Reserve's possible easing of fiscal policy this year.
Currently, data from CME Group's FedWatch Tool indicates that the likelihood of the Fed reducing interest rates at its March meeting is at 8.5%, which is less than half of the 17.5% projection at the beginning of the week.
With Bitcoin reaching $52,884 on Bitstamp the previous day (its highest since late November 2021), Skew, a popular trader, drew attention to the significant role of the 21-period exponential moving average (EMA) currently approximating $51,000. His analysis revealed a trend of erratic price activity with many inside bar closes within the same day's range.
Spot-Bitcoin exchange-traded funds (ETFs) in the U.S have witnessed inflows of almost half a billion dollars on February 15. This followed a remarkable week where ETF products experienced a resurgence of interest, over one month after their first introduction.
A recent analysis by Venturefounder from the on-chain analytics platform CryptoQuant proposes that a decrease in ETF interest could render Bitcoin vulnerable to a severe retracement. He suggested that when Bitcoin ETF's net inflow normalizes, a significant correction of 20-30% may begin.
Investments and trading moves inherently come with risks. Hence, individuals should perform their due diligence before making decisions.
Published At
2/16/2024 6:18:31 PM
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