Several altcoins posted double-digit gains on January 23, 2021, while Bitcoin’s relief rally was deflected at $34,000. Bitcoin’s plunge below $30K was quite brief as the flagship crypto got a new wave of support which featured the $10 million ‘buy the dip’ moment from Microstrategy.
Data acquired from TradingView shows the massive inflows have enabled bitcoin to gain 4.92% to reach a daily high at $33,866. But, it has since retraced to consolidate just above $32,000.
There is a growing prospect that the Biden administration will pass massive stimulus packages to help get the US economy back on track. In that context, the conversation about bitcoin becoming a reserve currency are starting to pop up again.
Even though bitcoin’s recent volatility has made some analysts say bitcoin is a cyclical asset instead of a hedge, the price recent movements have caught the eye of retail buyers and investors who have renewed their interest in cryptocurrency markets.
Notably, the Bank of International Settlements has highlighted that digital currencies may have use and the organization has gone ahead and outlined plans to roll out several central bank digital currency (CBDC) trials in 2021.
Since the Bitcoin fear index has changed from “Extreme Greed” to “Fear,” some of the investors seem to be taking Warren Buffet’s advice of buying when there is a lot of blood on the streets.
Institutional Investors Worried About Future Regulation
According to the head of trading at CrossTower, Chad Steinglass, BTC’s correction may have originally been catalyzed by trendy comments from US Treasury Secretary Janet Yellen.
Before Yellen’s comments, Bitcoin had encountered a:
“post-correction consolidation and was rangebound between $34,000 and $38,000 with traders waiting to see which side of the range would be challenged or broken.”
Steinglass also explained that bitcoin’s next movements will be determined by the many actions of institutional investors. He stated:
“$31,000 was a pocket of strong support, so at least not everyone is selling. We’ll have to wait and see if that wall remains, or if institutions continue to accumulate. If they do, it’s likely that the trend will re-establish itself and continue. If they move to the sidelines waiting for more regulatory guidance, then their lack of buy flows will be acutely felt.”
Several of the top altcoins also recovered strongly on Saturday after the week’s deep correction. Polkadot (DOT) rallied 7.09% to reach a daily high at $18, while Chainlink (LINK) recorded double-digit gains and peaked at $22.31. Tezos (XTZ) has also seen a growth in interest, which boosted the altcoin’s price by 15% to trade at $3.36.
The general crypto market cap now hovers above $900 billion, and bitcoin’s dominance rate has dropped below 64%.