Bitcoin exchange-traded funds (ETF) have attracted strong inflows from the investors in January. A Morningstar report on Feb. 3 shows that BlackRock and Fidelity’s spot Bitcoin ETFs ranked eighth and tenth among ETFs in the United States. On the flip side, the Grayscale Bitcoin Trust (GBTC) witnessed the second highest outflows among ETFs in the first month of the year. A minor ray of hope for the bulls is that the outflows in GBTC are beginning to slow down.
CoinShares data shows that digital investment products witnessed inflows of $708 million last week, taking the total year-to-date inflows to $1.6 billion. Bitcoin was volatile in January, but ended with a minor rise of 0.7% as markets digested the launch of Bitcoin ETFs and the subsequent outflows from GBTC.
ARK Invest CEO Cathie Woods said in a chat with chief futurist Brett Winton that the launch of the ETFs have been attracting gold investors into Bitcoin. Wood anticipates Bitcoin to prove its billing as a “risk off asset” during times of economic uncertainty.
Bitcoin plunged below $40,000 on January 22, but the bears could not sustain the lower levels. That attracted aggressive buying by the bulls who pushed the price back above $42,000 on January 26. Both moving averages have flattened out and the relative strength index (RSI) is near the midpoint, indicating a balance between supply and demand. The BTC/USD pair may oscillate between $40,000 and $45,000 for a few days. It is usually tricky to predict the direction of the breakout from a range. If buyers drive the price above $45,000, the bullish momentum could pick up.
The pair may then rally to the psychologically crucial level of $50,000. The bears are expected to defend the $50,000 level with vigor, but if the bulls do not give up much ground, it will enhance the prospects of the continuation of the uptrend. The pair may then rise to $52,000. Contrarily, if the price breaks below $40,000, it will indicate that the bears have overpowered the bulls.
That may signal the start of a deeper correction toward the next major support at $35,500. The downside looks limited as buyers are likely to aggressively buy the dips.
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