Bitcoin recently rose above $42,000 after trading below $40,000 for several days. This market recovery is believed to be the result of various factors, including recent news about the US economy.
Macroeconomic Factors That Contributed to Bitcoin's Recent Growth
The Personal Income Expenditures (PCE) price index, a leading indicator of inflation, was released on January 26 and was below expectations. This suggests U.S. inflation is cooling, and experts predict the Federal Reserve will likely scale back its aggressive monetary policy.
The Fed's hawkish stance is known to have a negative impact on the price of Bitcoin and the broader cryptocurrency market. Thus, this recent development is positive and could encourage investors to double their investment in the flagship cryptocurrency, thereby triggering a rise in prices.
Meanwhile, US Treasury data recently showed that the country has reached a record debt level of $34.1 trillion. While this raised concerns about the impending collapse of the US dollar, it also presented Bitcoin and other cryptocurrencies as a safe haven against a potential currency devaluation.
Interestingly, various financial analysts, including renowned economist Peter Schiff, continue to predict the imminent collapse of the US dollar. In light of this, financial writer Robert Kiyosaki urged everyone to invest in Bitcoin to avoid becoming poorer due to government actions.
Another factor believed to have contributed to Bitcoin's recent rise is the expiration of monthly BTC options contracts on Deribit. The expiration outcome likely played a critical role in Bitcoin's rally, given that CryptoQuant CEO Ki Young Joo identified the derivatives market as being responsible for Bitcoin's recent decline.
BTC Price Jumps After Downtrend |Source: BTCUSD on Tradingview.com.
GBTC outflows slow for fourth day in a row
Grayscale's GBTC experienced an outflow of just $255.1 million on January 26, continuing the fund's recent trend of declining outflows. NewsBTC reported that the Bitcoin ETF saw outflows of $515 million, $429 million, and $394 million on January 23, 24, and 25, respectively.
As noted by Bloomberg analyst James Seyffarth, January 26 also turned out to be the lowest outflow day for GBTC since converting to a spot Bitcoin ETF. This development suggests that fund investors may be reluctant to take profits. This is also important because shades of gray have contributed to the selling pressure that has plagued Bitcoin recently.
At the time of writing, Bitcoin is trading at around $41,700, up more than 4% in the last 24 hours, according to data from CoinMarketCap.