Bitcoin (BTC) has
experienced a 6.0% increase this week, reaching $51,000 per coin. This marks a record high since December 28, 2021. Despite briefly
surpassing the $50,000 level earlier in the week, Bitcoin prices faced
challenges in maintaining this threshold, particularly in the wake of an
unexpected rebound in U.S. inflation.
The resurgence of inflation impacted markets
significantly, leading to a sharp drop in bets on interest rate cuts by the
Federal Reserve (Fed) in March and May, with figures falling to 6.5% and 37.8%,
respectively. Concurrently, U.S. 10-year Treasuries yields surged to 4.32%, the
highest level since December 1, 2023. The S&P 500 index futures also
experienced a notable decline of 1.9%, marking the largest single-day drop in
the last five months.
Bitcoin demonstrated resilience in the face of
these challenges, experiencing a brief 3.0% decline to $48,312 before
rebounding above $50,000. This recovery suggests strength in Bitcoin, although
caution is advised before rushing into new long trades. Notably, investors have
been lowering their stakes in Bitcoin. The ProShares Bitcoin Strategy ETF
(BITO) reported capital outflows of $60.2 million last week. This is a fourth
largest outflow in its history. The largest outflow was recorded in the
previous week, when the fund lost $108.4 million. Spot Bitcoin-ETFs are doing
much better. The infamous Grayscalle Bitcoin Trust ETF (GBTC) reported only
$507.7 million outflows last week, while BlackRock iShares Bitcoin Trust (IBIT)
reported an inflow of $250.7 million. However, these inflows are gradually declining.
A week earlier IBIT reported inflows of $548.7 million.
The upcoming halving of Bitcoin in April seduces
retail investors, but this might be a bullish trap ahead. Nevertheless, u/MelloN98
put a $14,000 bet on Polymarket for Bitcoin prices to rise to $50,000 by the
end of February. And he won, receiving $77,400 or 550% of net profit. He made
another $27,000 bet for Bitcoin prices to rally to a new all-time high by March
31. If he wins again he will get a $203,000 or 750% on top of his bet. We wish
him luck. «Ave, Caesar, morituri te salutant!».
Not only this happy man believes in a sky-high
rally this time. The upcoming Bitcoin halving in April has captured the
attention of retail investors, but caution is warranted as this excitement
could potentially lead to a bullish trap. Deribit crypto exchange data
indicates increased investor activity in buying call options with strike prices
ranging from $65,000 to $75,000 per coin, with expiration dates set between
April and June.. These bets look more secure as on Polymarket, and there are much
cheaper. But the expiry looks to close to hit the desired targets. The alter.me
fear and greed index, currently at 79 out of 100, reflects extreme greed in the
market, reminiscent of November 2021. However, historical trends suggest that
such high levels of greed could lead to significant corrections, as seen in the
77% drop in Bitcoin prices following the last instance of extreme greed.