BTC at $43k: Bitcoin Bulls Back in Charge After $100 Million Liquidation Spree

Bitcoin appears to be regaining its footing after a rocky start to 2024, with price bouncing back above $43,000. Several key developments suggest growing stability and mainstream acceptance for the cryptocurrency.

TLDR

• Bitcoin price rebounded back above $43,000 as the market expects the Fed to pause rate hikes at this week’s FOMC meeting. There are also signs that outflows from Grayscale’s spot bitcoin ETF may be slowing.
• Bitcoin suffered some bearish price action after the SEC’s spot ETF decision, but it has since rebounded. Data shows bitcoin open interest recently increased by $350 million and investors moved $220 million worth of BTC into long-term storage.
• Over $100 million was liquidated in the crypto market after Bitcoin neared $44,000, pushing its price to a 3-week high. Most of the liquidations were shorts, while altcoins like Ethereum also saw significant liquidations.

Driving bitcoin’s resurgence is an expected pause in Federal Reserve interest rate hikes at this week’s FOMC meeting. With rates potentially peaking, investors seem to be rotating back into risk-on assets like bitcoin.

“The Fed is already expected to pause rates, so this week’s FOMC meeting is probably mostly priced in,” said Mathew Graham of Ryze Labs. “However subsequent to a pause, should the Fed lower interest rates more than is already anticipated this would absolutely be bullish for bitcoin prices.”

Outflows from Grayscale’s spot bitcoin ETF also show signs of slowing, indicating institutional managers may be ramping up investment in the new product. Analyst James Seyffart noted the possibility of Grayscale competitor ETFs soon exceeding it in volume. “Institutional interest in bitcoin will continue to develop,” according to analysts at Ryze Labs.

Recent on-chain data affirms building momentum as well. Bitcoin open interest on futures recently increased by over $350 million in just three days according to Coinglass. Meanwhile over $220 million worth of BTC was moved off exchanges into long-term storage from January 25-29 based on CryptoQuant data. This deficit in supply could drive further price increases if demand continues rising.

Bitcoin appears to be stabilizing around $43,000 as investor sentiment improves. But the path forward remains precarious, evidenced by over $100 million in liquidations last week when BTC approached $44,000. Bitcoin dominance sits around 52.5% according to CoinGecko, with altcoins like Ethereum also capturing liquidity from short traders during recent volatility.

With tailwinds from institutional adoption and a potential Fed pause on rates, bitcoin seems to be finding its legs in 2024. But users should remain vigilant against phishing efforts as the crypto industry comes into focus for mainstream finance.