Bitcoin price is being pressured by interest rate concerns, the spot Bitcoin ETF net outflows and the Mt. Gox bankruptcy estate process.
Bitcoin (BTC) price traded below $39,000 for the first time in over 50 days on Jan. 23. The downward movement initiated on Jan. 11, coinciding with the U.S. Securities and Exchange Commission (SEC) approval of the spot Bitcoin ETF. The 17.5% correction in the 12 days leading to Jan. 23 triggered an aggregate $385 million liquidation in long (buy) futures BTC contracts.
From a macroeconomic perspective, 2024 marked a reversion in the DXY index which measures the strength of the U.S. dollar against a basket of foreign currencies, including the euro, the British pound, and the Japanese Yen. After trading at 100.80 on Dec. 28, 2023—its lowest level in more than 5 months—the U.S. dollar gained momentum, and the index currently hovers near 103.75. This movement suggests that investors believe that despite fiscal problems, the odds still favor the U.S. currency—at least in relative terms.
Analysts and economists are now pricing higher odds for the U.S. Federal Reserve’s (Fed) successful strategy to curb inflation without causing an economic contraction. The 1-year expectation for the U.S. moved down to 2.43% in January 2024, down from 3.09% in December 2023. Meanwhile, a recession seems out of the radar as the Conference Board "Economic Forecast" expects a 1.7% growth outcome for the U.S. gross domestic product in the first quarter, followed by a 2.4% growth in the second quarter.
