Bitcoin has regained momentum after a four-day decline, bolstered by a weaker US Dollar. The cryptocurrency’s recovery has also been fueled by discussions in several US states about adopting Bitcoin reserves, reflecting growing institutional interest. Additionally, the overall sentiment toward cryptocurrencies remains strong, a trend that has persisted since the start of the Trump administration.
Source: TradingView (click to enlarge)
US States Eye Bitcoin Reserve
Following the inauguration of President Trump crypto market sentiment has remained bullish. The appointment of an interim SEO Chair who is known to be a proponent of crypto and who is developing a framework for crypto has been lauded by crypto enthusiasts.
This week however, various US States are considering a Bitcoin reserve, something which will further enhance the appeal of the Worlds Largest Crypto and could help support prices. Yesterday Utah became the second US state after Arizona to clear the Strategic Bitcoin Reserve Bill. There is hope that if the Bill is approved it may see other States follow suit.
An estimated 11 US states are exploring the inclusion of Bitcoin in their strategic reserves, with many considering a standard allocation of 10% of their total funds. This highlights the growing recognition of Bitcoin as a viable asset in government portfolios.
Joining the list of states to advance a Strategic Bitcoin Reserve Bill is Illinois who are eyeing a 5-year ‘HODL’ strategy. The bill was submitted to the Rules Committee on January 29 to finalize regulatory details, marking a critical step before it advances for full approval by lawmakers.
Source: Ilga.gov (click to enlarge)
GrayScale Launches Bitcoin Miners ETF
Grayscale has introduced a new crypto investment product, emphasizing the vital role of Bitcoin miners in supporting the Bitcoin network. The company stated that miners play a crucial part in ensuring the network’s security, integrity, and overall operation.
Grayscale has launched the Bitcoin Miners ETF, giving investors a simple way to gain exposure to Bitcoin miners and the global mining industry. David LaValle, Grayscale’s global ETF head, explained that Bitcoin miners are key to the network and are expected to grow significantly as Bitcoin becomes more widely adopted, making the ETF an attractive choice for many investors.
Bitcoin mining stocks struggled in 2024 to replicate the gains of Bitcoin, which recorded gains of around 112% for the year. This is backed up by data from Hashrate Index and Google (NASDAQ:GOOGL) Finance shows that most publicly traded Bitcoin mining companies ended 2024 with major losses, with some seeing their value drop by as much as 84%.
It will be interesting to see what the demand and flows are like for miners’ ETF, i for one will be keeping an eye on how this develops.
ETF Flows Remain Positive
Bitcoin ETF flows have struggled this week following on from massive inflows last week even though it was a four-day week with the President’s inauguration.
This week however, saw massive outflows on Monday of around $457.6m before two days of positive inflows. However the amounts on Tuesday and Wednesday were quite small at $18.4 and $92m respectively. The smaller inflows could have had something to do with the FOMC meeting as well as the threat of the market’s reaction to proposed tariffs from February 1.
Source: Farside Investors (click to enlarge)
I am still positive on the overall Bitcoin picture from a fundamental perspective. The US being on a drive to build Bitcoin Strategic Reserves is a good thing as it will further enhance the Cryptos standing.
Another reason why I remain relatively optimistic is the recent on chain analysis by Glassnode. In the Executive Summary, Glassnode explained Cyclical Market Growth: Their take is that the rate of Bitcoin price appreciation has declined cycle by cycle, reflecting a path into market maturity. The drawdown profile of this cycle thus far closely resembles that of the 2015–2017 cycle. Prior cycles also hint at a potential acceleration phase in the bull market, which tends to occur around this time (relative to the cycle low).
This is just another reason that we could be due for another period of gains and potentially fresh all-time highs for BTC/USD.
Technical Analysis BTC/USD
Bitcoin (BTC/USD) from a technical standpoint printed a bullish engulfing candlestick yesterday with follow through today.
However, in order to convince bulls and myself that we could go on and achieve fresh all-time highs, i would like to see a daily candle close above the 106.200. This would be the highest daily close for Bitcoin and may embolden bulls to join the rally.
Bitcoin (BTC/USD) Daily Chart, January 30, 2025
Source: TradingView.com (click to enlarge)
Dropping down to a H2 chart and this could come to fruition after price broke out of the descending channel in play.
Price is currently pulling back with a possibility of a deeper pullback toward the 100-day MA resting just around the key support level at 103500.
This may present an excellent risk to reward opportunity for potential bulls with further support being found at the 102650 handle, where we have both the 50 and 200-day MAs restings.
Looking at potential barriers on the upside lie at 107140 before the 108000 109350 handles come into play.
Bitcoin (BTC/USD) Two-Hour (H2) Chart, January 23, 2024
Source: TradingView.com (click to enlarge)
Support
- 103500
- 102650
- 100000
Resistance
- 107140
- 108000
- 109350