Bitcoin Stabilizes as Traders Ahead for Year of the Dragon

Although many analysts offer cautious advice, investment enthusiasts still expect the Year of the Dragon to bring good fortune to the cryptocurrency market.

According to CoinDesk Indices data, Bitcoin (BTC) has been trading at a constant price in recent days, fluctuating above 42,000 USD/BTC since the first session of the week, when countries in the East Asian region are counting down the risks. Last working day before Lunar New Year. In the next few days, East Asia will welcome the year of the Dragon, considered one of the luckiest and most prosperous mascots in the zodiac.
In 2023, CLSA - a Hong Kong-based brokerage company predicted in a report in January that this will be the year that sees market fluctuations and the outlook for the whole year is also softer, At the same time, we advise investors to venture beyond their comfort zone cautiously. However, the market has made a significant jump after a long period of gloom, with Bitcoin prices up nearly 94% over last year and Ethereum (ETH) up 47%

CoinDesk Indices analyzed that the CoinDesk market index increased 5 times compared to the S&P 500 index largely thanks to Bitcoin's outstanding performance. Meanwhile, Ethereum underperformed throughout 2023. Daniel Wang, co-founder and CEO of Taiko, a digital finance aggregation platform, sees the potential for ETH's price performance in 2024 to be filled with positivity. “The Year of the Dragon opens new doors for Ethereum, especially with the expected impact of ETFs. ETH is on track to achieve lower and faster transaction fees with its long-awaited upgrade.”

According to Senior Analyst at Metalpha - Lucy Hu, the halving of the Bitcoin block reward in 2024 and the ability to curb inflation will bring the promise of good prices for the market. “Even though the cryptocurrency market is currently experiencing a “buy the rumor - sell the news” effect, the year of the “Dragon” according to the Eastern concept is on track to be one of the best performing years. especially, as inflation is currently under control and the Bitcoin halving event takes place in April this year, this will boost market confidence. We hope the fiery spirit of “Dragon” can bringing the market to a new level never seen before,” she said

However, CLSA analysts still cautiously warn that some market fluctuations are still likely to occur and it is not necessarily smooth sailing. Investors should seek professional advice, not follow the crowd, before entering the market.

Regarding Bitcoin ETFs, CoinShares data shows that new funds in the United States have accumulated $7.7 billion in funds since launch, offsetting a $6 billion outflow from existing funds. in. Specifically, BlackRock-managed IBTC and Fidelity's FBTC - the two leading funds among newly issued Bitcoin spot ETFs recorded $884 million and $674 million in weekly capital inflows, respectively. Both numbers were slightly higher than last week in dollar terms. Meanwhile, investors withdrew about $927 million from Grayscale's GBTC, a notable decrease from last week's $2.2 billion.

James Butterfill, Lead Research Associate at CoinShares, noted in a report that the data highlights a significant decline in flow momentum in recent weeks. Outflows from existing funds like GBTC were a source of concern when spot Bitcoin ETFs began trading in the United States on January 11. After a brief wave of withdrawals largely related to profit-taking and FTX selling GBTC, outflows have slowed, while inflows from new participants have remained steady. “Solana (SOL) - the company that made a remarkable comeback in 2023 with a 10x price increase is leading inflows into altcoin-focused funds with $13 million. Meanwhile, investment vehicles holding Ethereum and Avalanche (AVAX) tokens have suffered losses of $6.4 million and $1.3 million in outflows, respectively,” the expert shared.

On the part of the US Government, Treasury Secretary Janet Yellen said that the cryptocurrency industry increasingly poses a number of potential dangers to the financial system, including the danger of stablecoins operating on Cryptocurrency platforms and price fluctuations. Therefore, she will continue to work with the US Congress on cryptocurrency legislation. “Existing rules and regulations should be enforced and Congress should pass legislation to specifically regulate stablecoins and spot markets for crypto assets that are not securities,” she said. speak.