- Bitcoin price is trading horizontally, trapped within the upper range of the Bollinger Indicator.
- BTC could make a 5% move north soon to clear the $43,750 blockade as volatility increases.
- A strong break and close below the centerline of the Bollinger at $41,880 would invalidate the bullish thesis.
- ETF specialist Eric Balchunas highlights how Chinese investors are flocking to the US ETF market.
Bitcoin (BTC) price continues to sustain its bullish outlook, holding above a key support level. Among other drivers, the spot BTC exchange-traded fund (ETF) theme continues to drive markets even as investor countdown to the halving event continues.
Also Read: Bitcoin price scenarios to consider with approaching BTC halving event
US Bitcoin ETF market entices Chinese investors
Reports by Eric Balchunas, a specialist at Bloomberg Intelligence focusing on exchange-traded funds (ETF), highlight that “Chinese investors are stampeding out of their local market in favor of the US-focused ETFs”. This is seen with spikes in total volume of ETFs traded in China.
Total volume traded for China
According to Balchunas, quotas remain a challenge, as the Chinese are buying in at premiums of up to 43%, which has the government issuing warnings. Quotas are an official limit on the number or amount of purchases allowed.
Nevertheless, Balchunas observes that Chinese traders don’t care about the quotas because the US ETF market is hugely driven by the fear of missing out (FOMO).
China so beat up and US at record highs and then you add on the premium, it becomes selling low and buying high on steroids, feels like it could end in tears for the local China investors.
— Eric Balchunas (@EricBalchunas) February 6, 2024
It comes as the Chinese markets continue to suffer on the back of a real estate crisis. The situation is so extreme that the country had to tighten its stock market rules in a bid to halt a deepening sell-off in the world's second-largest economy.
Clear two horse race among 9 new spot bitcoin ETFs…
— Nate Geraci (@NateGeraci) February 5, 2024
BlackRock & Fidelity.
That said, *strong* middle class developing in this category.
ARK & Bitwise on path to hit $1bil in not too distant future.
Invesco now over $300mil.
Both Valkyrie & VanEck $100+mil.
via @apollosats pic.twitter.com/ST4j6UFeIF
Bitcoin price outlook comes into focus as crypto analyst calls for less volatility
Despite BTC ETFs in the US proving popular, Bitcoin price is trading horizontally, absent any directional bias. It is trapped between the centerline and the upper band of the Bollinger indicator at $41,919 and $44,278, respectively.
Although the odds favor the upside, given that the Relative Strength Index (RSI) is above the 50 midline and the Moving Average Convergence Divergence (MACD) and Awesome Oscillator (AO) indicators are in positive territory, the market remains indecisive.
According to @CarpeNoctom, a trader and analyst who examined BTC on the weekly time frame, more volatility contraction is needed before volatility expansion as the weekly Bollinger bands are somewhat spaced out.
The Bollinger indicator is interpreted such that when bands contract, it means volatility is reducing. The reverse is true in that as volatility increases, the bands expand. A significant contraction of the bands with the asset’s price between the upper band and the centerline means the odds favor the upside.
However, if the price of the asset lies between the centerline and the lower band of the Bollinger indicator, the market favors the downside. The volatility expansion follows this dynamic, expanding toward the direction in which the market is leaning.
With the Bollinger indicator traditionally used in the daily time frame, based on the evaluation by @CarpeNoctom, Bitcoin price could record a volatility expansion favoring the upside. The reasoning is that it lies atop the centerline of the Bollinger indicator at $41,919, with the upper band and the centerline coming together, thus showing volatility contraction.
Increased buying pressure could see BTC shatter the upper band at $44,278, potentially extending the gains to the $46,000 psychological level. In a highly bullish case, Bitcoin price could tag $48,000 or extend a neck higher to the $50,000 level. Such a move would denote a 15% climb above current levels.
BTC/USDT 1-day chart
On the flip side, if the bulls show weakness, the bears could seize the market, sending the Bitcoin price below the centerline. An extended fall could see BTC slip to the lower band of the Bollinger indicator at $39,560, marking a foray into the demand zone between $38,496 and $39,895. A break and close below the midline of this order block at $39,196 would confirm the continuation of the fall.
The next logical targets for Bitcoin price in such a directional bias would be $37,800 or, in a dire case, $30,000. A daily candlestick close below this psychological level would invalidate the prevailing bullish outlook.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.