Coinbase Premium Index recovery boosts Bitcoin demand amid supply constraints and bullish market catalysts.
Bitcoin Rises to $98K Amid Sustained Demand
Bitcoin extended its rally over the weekend, reaching $98,300, supported by the $91,405 level. This marks six consecutive days of price increases, driven by strong demand and limited supply dynamics.
Supply Constraints Bolster Bitcoin Prices
Bitcoin’s mining difficulty and hash rate reached record highs following the April halving event. These metrics pushed BTC’s inflation rate to a low 1.11%, significantly below the US Consumer Price Index of 2.7%. The supply pressure is further compounded by decreasing Bitcoin reserves on exchanges, underscoring scarcity in the market.
ETF Inflows Fuel Bitcoin Demand
Institutional demand is on the rise, with Bitcoin ETFs accumulating over $128 billion in assets. BlackRock’s IBIT ETF accounts for $54 billion of this total. Additionally, MicroStrategy has continued its BTC accumulation strategy, now holding over 450,000 BTC. Market predictions suggest the company could exceed 500,000 BTC by March.
Coinbase Premium Index Recovery Signals Rising Interest
The Coinbase Premium Index, a measure of American investor activity, has rebounded after a sharp decline in December. Data from CoinGlass reveals the index climbed from -0.24 to -0.021, signaling renewed buying activity.
CryptoQuant reports the index has moved above its 14-day Simple Moving Average, a bullish indicator for BTC prices. This suggests institutional and retail investors in the U.S. are increasingly accumulating BTC.
Upcoming Catalysts for Bitcoin’s Market Performance
Several factors could further boost Bitcoin’s market position. President-elect Donald Trump’s upcoming inauguration and the scheduled $16 billion FTX distributions are expected to inject liquidity into the market. Additionally, Bitcoin’s Market Value to Realized Value (MVRV) ratio remains low, indicating it may still be undervalued.
Price Analysis and Forecast
Bitcoin has consistently held above the 50-day moving average and found strong support at $91,400. Analysts predict a continued rise toward the all-time high of $108,000, with a potential extension to the $114,000 level based on Fibonacci retracement levels.
However, a bearish head-and-shoulders pattern could emerge, posing risks of a breakdown below $91,400.
Bearish Warnings Emerge
Jacob King of WhaleWire has cautioned investors about a potential bear market. King pointed to reduced Bitcoin purchases by MicroStrategy, shifts in El Salvador’s crypto policies, and Tether pausing new minting as signs of market instability. He also warned that a broader market downturn could negatively impact Bitcoin.
Outlook for Bitcoin Amid Mixed Sentiments
Bitcoin’s trajectory remains influenced by key market dynamics and investor sentiment. While bullish indicators persist, potential risks demand cautious optimism.
Disclaimer:
The information provided on 13Desk is for informational purposes only and should not be considered financial advice. We strongly recommend conducting your own research and consulting with a qualified financial advisor before making any investment decisions. Investing in cryptocurrencies carries risks, and you should only invest what you can afford to lose. 13Desk is not responsible for any financial losses incurred from your investment activities.
