In recent days, the price of Bitcoin has risen above $23,000, and has twice attempted to break above $25,000 as well. However, both attempts failed, to the point that now the price is back below $24,000.
Summary
The boom after Valentine’s Day
On Valentine’s Day, data on the US inflation rate for January were released.
The figure was higher than expected, but only slightly. However, in the days just before, the price of Bitcoin had fallen from $23,300 to $21,500, perhaps because the markets feared an even worse figure.
In fact after the release of that figure the price had risen back above $22,000 almost immediately, thanks in part to a good reaction from the US markets.
However, what happened the next day surprised everyone.
Price of Bitcoin attacks $25,000
In fact, on 15 February, Bitcoin’s price was initially around $22,200, but within a few hours it made three consecutive jumps.
With the first one it returned to $22,800, and with the second one it actually skyrocketed above $24,000, which is a level it had not reached since the beginning of the month.
The really peculiar thing is that it still had the strength to make a third leap up to $24,900. In other words, it attempted an initial hesitant attack on $25,000 that immediately failed.
At that point, it seemed that the price might come back down and then, calmly in the following days, resume with other advances, but instead the following day, which was yesterday, it managed twice to rise above $25,000 but failed to stay there.
The first assault actually closed well above $25,200 before suddenly dropping to $24,600. The second, on the other hand, which occurred less than three hours later, lasted very little and did not go above $25,040. These were two assaults so close together that they can be described as one assault in two phases.
After failing this second move, the price first dropped to $24,500, and then even went back below $24,000.
The current price is still well above the price on 14 February, although lower than yesterday, and is in line with the price at the beginning of the month, that is, before inflation fears caused it to fall below $23,000.
USDC’s role
Some analysts have perceived USDC‘s role in this dynamic.
USDC is the second-largest stablecoin in the world, and in recent days there have been widespread fears about its future.
In fact, the future of the third stablecoin, BUSD, has been cast into doubt with the freeze on the issuance of new tokens, and news has spread that a similar fate could befall USDC.
Between 13 and 15 February, USDC’s market capitalization fell from $41.3 billion to $40.7, and some believe that some of the funds flowing out of USDC may have been allocated to Bitcoin. In fact, the day of the abnormal rise in the price of BTC was actually on 15 February.
As of yesterday, though, USDC has recovered market capitalization, so much so that it has now even risen above $41.6 billion. This is therefore higher than on 13 February, and comparable to that of 10 February.
Sure enough, some of the USDC drained from the market has been converted into fiat US dollars, and some into USDT. However, it is not at all unlikely that some of it was sold to buy BTC, and with trading volumes as low as they are today this dynamic may have been able to play a role in Bitcoin’s price increase.
In fact, now that it has been exhausted, the price of BTC has also returned to normal.
It is worth noting that during the same period, BUSD’s capitalization has plummeted from 16.1 billion to 13.7 billion, and it cannot currently increase due to the suspension of the issuance of new tokens. Thus tokens returned to the issuer for redemption cannot be replaced by new tokens.
Benefiting the most from this dynamic, however, has been USDT (Tether dollar), or the world’s leading stablecoin, which has risen in one week from $68.2 billion in market capitalization to the current $70.1.
Bitcoin price future assaults on $25,000
The fact that Bitcoin’s first two price assaults on the $25,000 wall failed does not mean it cannot attempt additional ones.
Indeed, since the beginning of January, an upward trend seems to have been triggered, like some kind of long rebound after the November crash due to the FTX bankruptcy, and this upward trend does not seem to have died down yet.
After the beginning of February, i.e., when fears about inflation caused Bitcoin’s price to fall back below $22,000, it might have seemed that the upward trend this early in 2023 had come to a halt, but the events of the past few days have instead shown that that was only a temporary setback.
Perhaps even today’s descent below $24,000 may prove to be only a temporary setback, such that we may even see new attempts to assault the $25,000 mark in the coming days.
