Today the price of Bitcoin has returned above $46,000: we need to do some analysis to contextualize this increase in order to understand its impact on the medium-term trend.
In fact, while the sentiment still appears positive in the short term, it could change in the medium term.
Today’s analysis of Bitcoin price trend
Today the price of Bitcoin has also risen above $46,000, after yesterday it had risen above $45,000.
To tell the truth, the upward trend started on Wednesday, since from January 29th until Tuesday, February 6th, it basically only moved sideways around $43,000 without significant upward pushes.
Since Wednesday it has risen above $44,000, today is the third consecutive day of ascent.
The key point actually was the surpassing of the $44,000 mark on Wednesday, since after the drop generated by the sell the news triggered by the stock market debut of the new ETFs on January 11, it had practically traded sideways between $39,000 and $43,000 almost consecutively until Tuesday.
After a solid 25 days of sideways movement within that range, on Wednesday the price of Bitcoin broke through the upper resistance level of $44,000 and started a new mini-rally that has brought it up to $46,000 today.
Short-term future prospects regarding today’s Bitcoin price analysis
It is possible that this mini-rally will not stop today.
However, this rally is heavily influenced by traditional stock markets, both in the United States and in China. Tomorrow and the day after tomorrow, traditional stock markets will be closed for the weekend, so it may not be easy for Bitcoin to continue the rally.
Today, however, they are open, so it is possible that it was the Chinese markets themselves that supported the rise up to $46,000. To tell the truth, even yesterday it seemed that it was the Eastern markets that supported the rise above $45,000.
You understand how it will behave during the weekend with traditional bags closed.
In the recent past, weekends have often been days of flat calm in the crypto markets, and in particular in the Bitcoin market, with minimal trading volumes, not comparable to those of weekdays.
In this dynamic, new ETFs could play a key role, as they are traded on the stock exchange and therefore are completely inactive during the weekend.
In other words, on one hand the Chinese markets and on the other hand the new ETFs are probably the basis of this mini-rally, and both will suspend trading during the weekend.
It will probably be necessary to wait until Monday to have certainty or denials about the possible continuation of the mini-rally.
Medium-term prospects
In the medium term, there are two main perspectives.
The first one is obviously the April halving, since Bitcoin halvings occur only once every approximately 4 years, and it is the only monetary policy measure of Bitcoin.
There are many expectations regarding the halving, although the impact could be lower than in past cycles.
It will indeed be the fourth halving, and while the impact of past halvings on the price of Bitcoin was essentially unexpected, this one instead risks being a bit too predictable, and therefore not happening in the exact same terms as in the past.
Furthermore, the reward cut for miners will be 3.125 BTC per block, while in 2020 it was double and in 2016 it was quadruple. A significantly lower cut could have a lower impact on the price.
Finally, the halving has an impact on the price of Bitcoin after several months, although the first one, in November 2012, had an effect already at the beginning of 2013.
The second medium-term perspective is the possible return to $49,000.
In fact, on the day of the new ETF’s stock market debut, January 11th, the price of BTC jumped up to $49,000 before the sell the news trigger was activated.
There has been a hypothesis circulating for a while that this figure may not have been random, and that it could return even before the halving. However, it is not certain that, if it actually returned, it would remain there. A possible very rapid rise to $49,000 could trigger a widespread profit-taking, and therefore a decline.
The problem of miners
Then there is always the problem of miners.
The halving will halve the reward for miners. In preparation for this widely anticipated event, many miners are replacing old, inefficient machines with high energy consumption with new, more efficient machines with lower energy consumption.
To buy the new machines, they are forced to sell part of the BTC they have accumulated over time, although they obviously wait for the right moment to do so.
As soon as they realize that the mini-rally is over, they would probably start selling again, as they have already done since January 12th.
This makes it difficult to reach $49,000 in the short term, especially because during the weekend the mini-rally could temporarily stop, and it makes it particularly difficult to surpass that threshold if at some point the ascent were to slow down significantly.
The Chinese engine
On the other hand, however, there seems to be a sort of “Chinese engine” behind the mini bull run of Bitcoin that started at the end of October.
China effectively needs to intervene in the financial markets to prevent them from continuing to decline, and in the last quarter of 2023, it did so by injecting new liquidity into the markets, a portion of which flowed into Bitcoin.
Combining this trend, which seems to be able to continue even in 2024, with the collection of new capital by new ETFs, the outlook seems optimistic, also due to the fact that there will be the halving in April.
While it is not the US central bank (Fed) that is currently fueling the rise of Bitcoin, it is likely the Chinese central bank (PBoC) instead.