Bitcoin has been falling heavily with the global stock markets at the beginning of 2022, as concerns about the possible effects by the ongoing macro-inflation trends and continuous crackdown of regulatory policies.
However, Bitcoin price managed to stay above the $35,000 zone and started a recovery wave on January 24th. BTC climbed above the $36,000 resistance zone to move into a short-term bullish zone. It is very likely that bulls are trying to drive the price up or investors are deciding to take profits for now. $38,200 is a very strong support for bitcoin. If bulls manage to take over this level, the next support would be $40,000.
Meanwhile, three facts suggest that bitcoin’s price will continue its increase.
Institutional Money is Starting to Come Back
In its weekly Digital Asset Fund Flows report, published on Monday, crypto investment firm CoinShares observed inflows for some institutional products. It is the first time in five weeks that there has been a net positive inflow as $14.4 million re-entered the space with investors buying the dip. The researchers reported that these inflows came during a period of significant price weakness, adding that this suggests investors “are seeing this as a buying opportunity” at current price levels. Analyst Willy Woo also suggested it was early signs that institutional funds are starting to return.
Bitcoin Mining Becomes More Sustainable
The Bitcoin Mining Council (BMC) announced the findings of its fourth quarter survey on Jan. 18. The survey focused on three metrics: sustainable power mix, technological efficiency and electricity consumption. The percentage of the global Bitcoin mining industry running on renewable power increased by 1% to 58.5% in the fourth quarter of 2021 according to new data. The industry’s estimated technological efficiency grew by 9% as well, to 19.3 petahash per MW. “We saw the trend continue with dramatic improvements to Bitcoin mining energy efficiency and sustainability,” said the founder and CEO of MicroStrategy Michael Saylor on January 19th.
Indicators Guided Buying the Dip
The crypto fear & greed index has plunged to a six-month low of 12 out of 100 on Jan. 25. This index is used by many investors to decide whether the dip is present, because many short-term investors like to “buy the fear, sell the greed.”
Bexplus Analysts point out that bitcoin could be mimicking the moves during May to July 2021, when the crash of the stock market took bitcoin down to $29,500. Then bitcoin bounced back and reached its all-time high.
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