Why is Bitcoin price up today? The bitcoin price is up today as the market digests a likely Fed interest rate benchmark flat over the next quarter or two.
Fed Rate Decision Is in Line with Expectations, Bitcoin Price Gains
The bitcoin price was volatile on Jan. 29 after the US Federal Reserve left its benchmark funds rate unchanged—a widely expected move.
Why is Bitcoin price up today? As it happened:
- The Federal Reserve (Fed), as already widely expected, left the range of the interest rate unchanged following the Federal Open Market Committee (FOMC) meeting at the end of Jan. 29.
- The accompanying policy statement was hawkish, with the central bank saying inflation is “somewhat elevated.”
- The Fed has now adopted a wait-and-see strategy, leaving all options on the table about its monetary policy in the near term.
- Bitcoin briefly dropped to $101,288 after the news, before rising as Fed Chair Jerome Powell spoke after the meeting.
- In comments after the meeting, Powell said there was no particular message behind the change in the policy statement’s language about inflation.
- Bitcoin and other large-cap cryptocurrencies gained after his statement, with BTC approaching $105,000 by the close of the press conference.
- Bitcoin’s price increase has triggered high liquidations in the derivatives market, indicating strong bullish pressure.
Key points:
- In the past 24 hours, short BTC positions worth $43.37 million were liquidated vs. slightly more than $17.48 million of long liquidations.
- Liquidation of short positions forces bearish traders to sell their positions.
- The bitcoin price kept rising in Sunday’s highs, the cascading liquidation effect.
- The size of these liquidations is on par with Jan. 20, when $53 million of shorts were expunged alongside a 10% price surge to new all-time highs of $109,000.
Spot Bitcoin ETF inflows boost BTC price
The recent price increase of Bitcoin has corresponded with a significant inflow of capital into the US spot Bitcoin exchange-traded funds (ETFs), indicating the substantial demand from institutional investors.
Key points:
Spot Bitcoin ETFs have seen inflows for nine of the past 10 days, totalling $4.3 billion of new money.
- This surge in capital shows growing investor confidence in BTC as a long-term store of value, especially among institutions using ETFs for exposure.
- If institutional demand stays strong, the bull market could soon enter a new phase of price discovery.
This view is echoed by several Bitcoin analysts:
Crypto Candy said that should momentum continue, the price could overtake the previous record range of 107,000 and 108,000 and “potentially enter price discovery.”
Bitcoin at a pivotal decision point,” popular analyst Mark Cullen added, BTC price must “break the channel and take out the equal highs” to cement the recovery.
“If BTC can break out of the channel and run the equal highs at 107,000 and hold any retest above 105,000, we are good.”