- Bitcoin price has gained over 5 percent since Monday to trade around $26.6k on Friday despite bearish sentiment.
- The easing of FTX liquidation and increased institutional demand for digital assets has strengthened investors’ confidence in the crypto market.
After four weeks of sustained bearish pressure, Bitcoin (BTC) experienced a relief rally in the past five days after rebounding from a crucial support level of around $25.2k. As a result, the total crypto market capitalization edged 1.4 percent higher in the past 24 hours to about $1.1 trillion. Notably, investors around the world gained more confidence in Bitcoin and the broader digital asset spectrum amid rising inflation and high interest rates.
For instance, the European Central Bank (ECB) raised its interest rates by 25 basis points for the 10th consecutive hike to a record high of 4 percent. Elsewhere, the United States Consumer Price Index (CPI) and Producer Price Index (PPI), which provide a broader gauge of consumer inflation, came in higher than expected.
As a result, more demand for digital asset products by both retail traders and institutional investors has increased the funds’ inflow to the nascent industry. For instance, SWIFT just announced that its Central Bank Digital Currency (CBDC) is being used by three central banks to test its CBDC interlinking solution.
Our central bank digital currency experiments have entered an exciting new phase! Three central banks have already begun beta testing our CBDC interlinking solution, which aims to facilitate greater interoperability between different digital currencies, as well as fiat forms of… pic.twitter.com/P8YDdtb2nx
— Swift (@swiftcommunity) September 14, 2023
Additionally, Germany’s top-rated bank, Deutsche Bank has announced a strategic partnership with Taurus to enable crypto custody services. Earlier this week, trillion-dollar asset manager Franklin Templeton joined other fund managers like BlackRock, Valkyrie, and Ark Investment in filing for a spot Bitcoin ETF.
Closer Look at The Crypto Market Outlook
The recent Bitcoin spike has ostensibly fueled high profit-taking according to an on-chain report conducted by market intelligence platform Santiment. Reportedly, Bitcoin profit taking has hit its highest level in the last two months with heightened on-chain activity. Moreover, the Bitcoin network has recorded an average of 1.1 million addresses sending and receiving coins per day, which is the peak in the past five months.
📈 #Bitcoin has continued to see 5-month high levels of unique address activity, with an average of 1.1M $BTC addresses sending and receiving coins per day. The +5% price rise over the past 3 days has also caused profit taking to hit a 2-month high today. https://t.co/GiGGABXv0s pic.twitter.com/f9PaTXjaut
— Santiment (@santimentfeed) September 15, 2023
Similarly, the second largest blockchain, Ethereum (ETH) has continued to record high network activity. The spike in on-chain activity is often followed by heightened price volatility amid rising demand.
During the week, a United States court ruled that the current FTX officials led by CEO John Ray III can liquidate the recovered digital assets, amounting to about $3.4 billion, to repay the distressed creditors. However, the court ruled that the FTX officials can only liquidate a maximum of $200 million per week to avoid crashing the crypto market. As a result, the initial high selling pressure that caused bearish sentiments was significantly reduced.
Meanwhile, some crypto analysts have warned of an imminent crypto correction as September of the pre-halving year has proven to be bearish. However, if Bitcoin price rallies behind $30k, the bearish pressure will be over perhaps until the end of the next major crypto bull rally.
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