Bitvavo Market News - Bitcoin celebrates new year with an upward trend

Bitvavo14. Feb. 2024

Last Saturday, at least one and a half billion people celebrated the Lunar New Year. Coincidence or otherwise, the start of the year of the dragon aligned with fireworks on the bitcoin market. The price soared to over €44,000 in just a short period of time. The cause? Read on to find out in this edition of Bitvavo Market News.

Marketupdate

In many ways, last week was a strong one for the bitcoin market. In just five trading days, the number of bitcoins in the U.S. bitcoin ETF vault increased by more than 26,000. The price rose from €39,500 on Monday Feb. 5, to €46,600 on Monday Feb. 12, marking a 18% increase. This puts the price a comfortable 20% higher than the midpoint of the range it was in for most of December and January. It is also well above the 40-day average that supported the trend several times in the fourth quarter.

After the launch of bitcoin ETFs on Jan. 11, the price fell about 21%; a modest correction for bitcoin, both in price and time. The strong price appreciation in recent days suggests that the price correction is behind us.

The price level lies at $49,000, or rather, between $48,000 and $49,000. Within this limit comes the high of $48,250 (A) on March 28, 2022, the beginning of the golden pocket at $48,500 (B), and the high of $49,000 (C) on January 11, 2024. We have mapped these points out in the chart below. It is interesting to compare this with the $32,000 price level. This price level also held great significance in the past and was the upper limit of a price range we traversed for more than seven months (D).

Last night, the price broke through this crucial price level above $49,000 (now: €45,500). This differs from the previous three bull markets. There saw a long pause after reaching the golden pocket, which is the price level at which 61.8% of the decline from high to low was recovered. Only after the halving did the price move above this level, reaching new all-time highs. If indeed this time, two months before the halving and following a mere four-week correction, the price steadily exceeds the $49,000 threshold, it will become challenging to explain this phenomenon with any term other than bullish.

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Bitcoin funds perform unusually well

Some of bitcoin's strength has come from U.S. bitcoin funds, where assets under management have been growing for 11 consecutive days. For ETF specialists like Matt Hougan (Bitwise) and Eric Balchunas (Bloomberg), this is an impressive feat. "It's very unusual that new ETFs are seeing inflows every day," writes Matt. "Very unusual and under-appreciated," confirms Eric.

On Friday alone, more than half a billion dollars flowed into ETFs. Only on day one were inflows higher. On Friday, just $51.8 million left Grayscale's fund. Never before has the outflow from this fund been so low. BlackRock's (IBIT) fund now holds $3.75 billion in bitcoin, and Fidelity (FBTC) is not far behind with $3.12 billion.

"I can't explain to you how ridiculous this is," writes ETF Institute founder Nate Geraci about these numbers. You can be pretty confident that bitcoin is on every Wall Street manager's agenda.

In total, more than 50,000 BTC has entered bitcoin funds. The nine new funds hold a combined sum of 203,000 BTC, which is more than MicroStrategy has in the vault (source).

Hedera (HBAR) and Saudi Arabia invest $250 million into venture studio

This vast sum will be invested in Saudi Web 3 startups over a five-year period through the newly launched company, DeepTech Venture Studio. Hedera is reportedly investing $50 million, while the remainder is from private investors from Saudi Arabia, who have been sought out for this purpose by the Saudi Ministry of Investment.

Companies are only eligible to access funds from the investment pool if they use Hedera's blockchain software. They must also be based in Saudi Arabia and operate in a cutting-edge field, such as artificial intelligence, blockchain, robotics, the Internet of Things, virtual reality, or quantum computing. According to the ministry, the initiative is "aiming to foster innovative investment opportunities in [Saudi Arabia]... and to globally support the entrepreneurship ecosystem." Hedera's share price rose more than 15% following the announcement.

In other news

Ethereum to get next upgrade on March 13.
⁠This is what Ethereum developers decided in a meeting last Thursday. The upgrade, named Dencun, should make it much more efficient to record data on Ethereum. As a result, some transaction costs will be lower. Dencun has now been successfully rolled out across all three of Ethereum's test networks. Ethereum underwent its most recent major upgrade last April.
Last quarter, MicroStrategy replenished its bitcoin reserve with 31,755 BTC.
⁠In total, the company now owns 190,000 BTC, which is worth $9.1 billion. MicroStrategy paid an average of $31,224 per bitcoin. At the time of writing, the company stands at a profit of $3.2 billion. In the latest quarterly figures, MicroStrategy calls itself a "bitcoin development company", suggesting they are looking for ways to boost the use of bitcoin around the globe.
Solana failed again, "but it's worth it," say developers.
⁠On Tuesday, the network was down for more than five hours. As a result, the price of solana fell more than 4%. According to Solana developers, these kinds of interruptions are part and parcel of a protocol undergoing rapid development. "In the short term, this is risky and painful, but in the long term, it makes the system more resilient and robust," says Helius founder, Mert Mumtaz. Once the interruption had passed, the solana share price recovered smoothly, and the price currently sits 17% higher than Tuesday.