Bitcoin price dwindles amidst resounding ETF success, BTC dethrones Silver with capital inflow
- Bitcoin noted $27.5 billion capital inflow, second to Gold, among commodity ETFs.
- Tether and MicroStrategy hold zero Ethereum and are adding to their BTC holdings consistently.
- Bitcoin price drops to $41,148 on Friday, despite institutional BTC accumulation.
Bitcoin price continued its decline closer to $41,000 on Friday. At the time of writing, BTC price is $41,148. Institutions like Tether and MicroStrategy are keen on BTC accumulation and the largest cryptocurrency’s ETFs have dethroned Silver as the second largest commodity.
Despite its resounding success BTC ETFs have failed to catalyze a rally in the asset’s price. Bitcoin’s dominance is on a decline and altcoins are rallying in the ongoing cycle.
Also read: Bitcoin, Ethereum and XRP hit peak profitability in ongoing cycle amidst altcoin season
Daily Digest Market Movers: Bitcoin dethrones Silver as second largest commodity ETF
- Bitcoin ETF approval by the US Securities and Exchange Commission (SEC) has garnered inflow from institutional investors.
- Tether and MicroStrategy hold zero Ethereum, both institutions are keen on accumulating BTC and the former added 8,888 tokens to their holdings.
- ETF issuers are racing to acquire more Bitcoins, as of January 19, BTC ETFs are valued at $27.5 billion, against Silver’s $11.5 billion and Gold’s $96 billion.
- In the first week of ETF approvals Bitcoin dethroned Silver to rank as the second-largest commodity ETF in the market.
- Gabor Gurbacs, advisor to Tether and VanEck notes the achievements of Bitcoin Spot ETFs within the first week of their launch, in a recent tweet on X:
- Bitcoin ETFs took 25 times El Salvador’s BTC holdings in the first week of launch
- BTC ETFs are nearly the size of Tether’s Bitcoin asset reserve
- ETF issuers hold BTC equivalent to 39% of MicroStrategy’s $8 billion Bitcoin reserve
- Institutions are racing to scoop up more Bitcoin as the halving approaches. The halving event is less than 110 days away, scheduled for April 2024.
Technical Analysis: Bitcoin price bleeds, BTC drops below $42,000 on Friday
Bitcoin price continued to decline despite ETF success and demand among institutions. BTC price hit $41,148 on Friday after falling through support at the 50-day Exponential Moving Average, at $42,084.
Bitcoin price is likely to find support in the zone between $38,064 and $40,796. According to IntoTheBlock data, 77.83% of the wallets holding Bitcoin are currently profitable.
A decline below the $38,064 support level could see BTC nosedive to the 38.2% Fibonacci Retracement of the price drop between November 2021 and 2022, at $36,747.
BTC/USDT 1-day chart
If Bitcoin price sees a daily candlestick close above the 50-day EMA at $42,085, a recovery in BTC price is likely, it could invalidate the bearish thesis for the cryptocurrency.
Open Interest, funding rate FAQs
How does Open Interest affect cryptocurrency prices?
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
How does Funding rate affect cryptocurrency prices?
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
