Bitcoin Calm Amid The Storm: Revisiting BTC-USD Demand Dynamics

Bitcoin (BTC USD) is about to conclude January with a considerable dip in volatility.

Price has not changed much since mid –month, except for the brief period around the presidential inauguration during the month.

Bitcoin initially demonstrated a surge in excitement at the start of the month. It even achieved an 11% rally from its lowest monthly price point to its current price level.

Nevertheless, its declining volatility is evident by its transaction count.

The number of Bitcoin-related transactions in the last 24 hours was within the same level as its transaction count at the start of the month.

The noteworthy dip in BTC price volatility reflects its exchange flow performance. BTC exchange outflows were slightly higher at 10,777 coins compared to inflows at 10,609 coins.

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Exchange flows have been oscillating with a distinct lower limit. Interestingly, the level of exchange inflows and outflows were both within the aforementioned lower limit at the time of observation.

The current exchange flows level suggests that it could potentially kick off the first week of February on a bullish leg.

However, it exchange flows could still dip further from the current level. In which case it would likely dip to multi-year lows.

Adoption Prospects Improve as More States Jump on the Bitcoin (BTC USD) Bandwagon

While BTC price volatility has been declining, there are signs that it could be brief. This is because the crypto adoption landscape has been heating up especially in favor of BTC.

Numerous states have revealed plans to either create a Bitcoin strategic reserve or accept it as payment. Utah and Kentucky just added to this list.

The Utah Economic Development Committee has reportedly greenlit the Blockchain and Digital Innovation Amendments bill.

The latter will allow the state to invest as much as 5% of its public funds into qualifying digital assets.

The investment criteria dictates that the state will only invest in digital assets that have over $500 billion marketcap and pass regulatory guidelines.

The bill will also allow the state to participate in crypto lending, mining and staking.

Meanwhile, Kentucky state representative TJ Roberts recently confirmed the introduction of a strategic Bitcoin Reserve Act.

This adds to the growing list that includes more than 10 states that have revealed plans for a Bitcoin strategic reserve.

Bitcoin Dominance Continues Rising

While BTC price has cooled down considerably, state interest is currently growing at a fast pace.

In addition, Bitcoin dominance continues to rise, indicating that investor confidence remains high especially for its long term outlook.

Bitcoin (BTC USD) dominance bottomed out at 54.56% on 3 December and has since then rallied to 59.67%. This growth could signal that Bitcoin might be close to the next volatility surge.

The surging Bitcoin dominance puts the cryptocurrency in a position to absorb liquidity once liquidity starts flowing back into the market.

BTC dominance is also rapidly approaching the previous highs that it achieved in November. It was backed by robust demand the last time it rallied above 60%.