On Monday, Bitcoin’s price surged above the $43,000 mark for the first time in two weeks, as bullish sentiment regained strength. This resurgence was driven by reduced concerns about Grayscale’s selling pressure and the influx of new bullish bets.
Grayscale’s GBTC had experienced significant selling pressure since its conversion to an ETF earlier in the month. This selling pressure had a substantial impact on the Bitcoin price, causing it to retreat from its earlier monthly highs of over $49,000 to the $38,000 range last week.
However, on Monday, Grayscale only transferred 6,500 BTC tokens to exchanges for sale, indicating a potential reduction in their selling activity.
The reduction to 6,500 BTC tokens per day is a significant decrease from the nearly 20,000 BTC tokens per day that Grayscale had been selling in recent weeks.
JP Morgan suggested last week that the profit-taking from GBTC, following ETF approval, has likely almost reached its conclusion.
Additionally, Marcus Thielen, an analyst at 10X Research, pointed out in a client note on Monday that there’s potential for new long positions to enter the market above the $43,000 level. He based this on Elliot Wave analysis, indicating that “wave 5,” which could push Bitcoin to new yearly highs above $50,000, has initiated.
Thielen also noted that several fundamental catalysts, including the decline in GBTC sales, the surge in US stock markets to new record highs, and Google allowing Bitcoin and Crypto ETF advertisements to commence from Monday, could all serve as tailwinds for the Bitcoin price.
Bitcoin Price Catalysts to Watch This Week
The current Bitcoin price finds itself at a critical juncture as it tests its 21 and 50-day moving averages (DMAs). A sustained breakthrough above these levels, coupled with the 50% Fibonacci retracement of Bitcoin’s recent pullback, could serve as confirmation of a bullish trend.
However, Bitcoin’s upward momentum could be jeopardized by the Federal Reserve meeting scheduled for Wednesday. During this meeting, the Fed is expected to push back against market expectations that interest rate cuts could start as early as March.
This resistance from the Fed is driven by recent stronger-than-expected US economic data, which raises concerns that US inflation may persistently remain above the Fed’s 2% inflation target. If market expectations for rate cuts are further diminished, it could lead to an increase in the value of the US dollar and higher US yields, which may exert downward pressure on the cryptocurrency market.
While Fed rate cuts may not materialize by March, they remain a widely expected possibility later in the year. This expectation becomes particularly relevant if US regional banks encounter difficulties when a key liquidity program introduced by the Fed in March 2023 to mitigate a bank crisis expires in March. This potential scenario is an important factor for the Bitcoin market, although it has been somewhat overlooked.
Another US banking crisis, particularly if it prompts the Fed to implement more accommodative monetary policy, could serve as a significant tailwind for the Bitcoin price in 2024.
In addition to this, Bitcoin traders will closely monitor the flow of funds in spot Bitcoin ETFs. According to CoinShares, GBTC witnessed outflows exceeding $2.2 billion, surpassing inflows into recently launched ETFs last week. Traders will be keen to assess whether GBTC outflows have slowed down this week and observe the pace of inflows into other ETFs. These dynamics in the ETF market are of considerable interest to the cryptocurrency community.