The case for Bitcoin (BTC) continuing its rise to $40,000 and beyond by the end of the year has strengthened as centralized exchanges recently experienced a significant outflow of coins.
Data from Glassnode shows that just over 37,000 BTC worth $1.4 billion have been withdrawn from exchanges since November 17, a sign that investors are taking direct custody of their coins.
The outflow likely represents a bias towards a long-term holding strategy, although some of it could be due to Binance’s admission of guilt. The hold bias signifies strong demand and easing selling pressure in the market amid euphoria over the expected launch of a spot exchange-traded fund (ETF) in the US
Foreign exchange outflows have historically marked local price lows and supported expectations of medium-term price increases.
BTC traded above $38,000 early Friday, leading to gains in the broader crypto market, with some major tokens gaining as much as 5% in the last 24 hours.
Total market capitalization rose to $1.5 trillion – a level last seen in May 2022 – and has increased by around $400 billion since the beginning of October.
Some market observers say expected central bank interest rate cuts in the coming months could attract capital to markets across the board – leading to more volatility in speculative markets such as cryptocurrencies.
“The Federal Reserve has paused its rate hike cycle and central banks around the world are following suit,” Anthony Rousseau, head of brokerage at TradeStation, told CoinDesk in an email. “It is plausible to believe that we have reached the peak of this tightening cycle. For risk assets to sustain demand, we need to find a path forward with lower interest rates and an end to quantitative tightening.”
“In 2024 we may have an opportunity for positive net liquidity for the markets. Bitcoin is a pure reflection of net liquidity in the markets and we would need to see positive liquidity to support any significant bullish activity,” Rousseau added.
Bitcoin’s momentum began to build late Tuesday when Federal Reserve Governor Chris Waller said recent data suggested a slowdown in the economy and that continued moderation in inflation showed current policy was at the “right point.” be.
Waller also said there was a good case for rate cuts within a few months if inflation continued to fall.
Interest rate decisions tend to move markets. Higher interest rates typically mean risky assets like stocks and cryptocurrencies take a hit as investors could take profits and invest in bonds.
We may earn a commission through affiliate links. Commissions have no influence on the opinions or ratings of our journalists. For more information, see our Ethics Policy.