The price of Bitcoin exceeded $105K after the Federal Open Market Committee decided to keep interest rates steady. Could this be a catalyst to push the price of Bitcoin to an all-time high?
The FOMC’s decision to keep federal interest rates between 4.25% and 4.5% acts as a catalyst for the cryptocurrency market. The total market capitalization of cryptocurrencies increased by 2.87% in the past 24 hours, reaching $3.5 trillion.
Amid recovering sentiment, Bitcoin surpassed the $105,000 mark, seeing a 3.15% rise over the past 24 hours. As conditions improve, bulls expect a similar rise to the 2021 market.
Institutions are back for more Bitcoin
Institutional support for Bitcoin resurfaced with the FOMC’s decision to keep interest rates steady. On January 29, the total daily net flow to 12 exchange-traded funds in the United States was $92.09 million.
Notably, this represents a significant recovery compared to the $457 million outflow on January 27.
On January 29, Grayscale purchased $106.23 million worth of Bitcoin. In addition, Fidelity acquired $18.20 million from Bitcoin.
In short, the recovery of institutional support, with a net inflow of $92.09 million into Bitcoin exchange-traded funds on January 29, signals renewed investor confidence.
Speculation stimulates as market recovers
With the significant recovery of the market and the growing expectations of a bull market similar to 2021, traders’ speculation is rising. Bitcoin’s open share rose 4.43%, to $66.18 billion.
In addition, the buying and selling ratio has now shifted to 1.0092, a significant improvement compared to 0.96 the previous day. Moreover, funding rates remain steady at 0.0086%. These key derivatives indicators indicate sustainable traders’ confidence, supporting Bitcoin’s bullish potential.
Bitcoin dominance nears 59% despite cryptocurrency craze
Bitcoin’s dominance in the cryptocurrency market has reached nearly 59%, which is a significant achievement considering the rapid emergence of many meme coins. Shows the Bitcoin Dominance Index (BTC. D) This trend, increasing by 15.50% in January alone and increasing 55% over the past three years. This trend contradicts previous expectations from market analysts who expected Bitcoin’s share to decline due to the influx of new cryptocurrencies and market volatility.
Furthermore, Coin base CEO Brian Armstrong commented on the staggering rate at which new tokens are generated, estimating around one million tokens entering the market weekly. His call for a sophisticated approach to exchange-listing underscores the challenges faced by the broader cryptocurrency ecosystem amid Bitcoin’s recovery.
Strong flows from ETFs put Bitcoin target at $200K
Institutional investment has played a pivotal role in strengthening Bitcoin’s dominance, especially through the approval and subsequent launch of Bitcoin spot ETFs. As of Jan. 29, these ETFs manage about $39.57 billion in total assets, a significant increase from $1.17 billion a year earlier. This influx of capital reflects the growing confidence in BTC among traditional investors and underscores its role as a cornerstone of the cryptocurrency market.
In addition, data shows that bitcoin whales – large BTC holders – are accumulating assets at an accelerated pace. The adoption of Coin Join, a methodology designed to enhance transaction privacy, has tripled since 2022 due to these large-scale transactions.
Analysts, including those from Standard Chartered, are optimistic, predicting that the price of bitcoin will reach $200,000 by the end of 2025 if these investment trends continue.
Trump’s cryptocurrency plans favor Bitcoin over altcoins as the political landscape shows a growing tilt towards bitcoin, especially after the election of Donald Trump, who expressed pro-cryptocurrency sentiment.
Czech National Bank plans 5% investment in BTC
The Czech National Bank has announced plans to allocate 5% of its foreign reserves to BTC, positioning itself among the first major Western central banks to include cryptocurrencies in their assets.
If the central bank continues with this initiative, it could invest as much as €7 billion in bitcoin with the potential impact on financial institutions’ perception of digital assets. According to the Financial Times, the current governor of the Czech National Bank, Alice Michel, intends to present a strategy to the board of directors to invest in bitcoin to diversify the reserves of the Czech National Bank. If its plans are approved by the board, the central bank could hold about 5% of its €140 billion reserves in bitcoin. At the same time, the governor acknowledged the cryptocurrency’s volatility and limited record, however, he emphasized investors’ growing interest in BTC since many companies introduced bitcoin exchange funds in 2024.
How can Bitcoin improve the management of central bank reserves?
The Governor of the Czech Central Bank has expressed interest in updating the Central Bank’s reserve management strategy. Traditionally, financial institutions benefit from low-risk investments such as U.S. government bonds because of their ability to simplify the process of obtaining loans and stimulate economic growth. However, portfolios, which have a background in investing, consider Bitcoin a viable alternative, as this asset class has the potential to provide high returns.
Moreover, throughout 2024, BTC achieved significant traction despite its price volatility remaining at extremes. Financial institutions have also begun to show interest in Bitcoin, as major financial organizations have integrated Bitcoin as part of their portfolios. If the central bank comes forward with its initiative, the role of BTC as a reserve asset may be validated and other financial institutions can reconsider their position on it.