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Bitcoin price continues to hover around $43,000 today, and investors were seeing the same prices yesterday. There is generally a price squeeze in altcoins as well. The upcoming opening of the US stock markets could eliminate this squeeze with spot Bitcoin ETF volumes. Let’s take a look at the current situation.
Bitcoin (BTC) Commentary
After the approval of the Spot Bitcoin ETF, the BTC price approached the $49,000 limit but then retreated by 10% as some analysts had expected. It has continued to linger in the $42,500-$43,000 range for the last few days.
The market had priced in the ETF approval, which turned out to be like a soda that had lost its fizz, and this was not surprising. The hacked account, the announcement removed from the SEC’s website, and Matrixport’s baseless ETF approval rumors postponed to the second quarter triggered this.
The good news for altcoins is that Bitcoin’s market dominance index has dropped from its local peak of 54.56% to 51.14% within a week. This is related to Ethereum’s gains. If BTC does not suffer significant losses, the relaxation of Bitcoin’s dominance index could lead to more inflows into altcoins, positively affecting the crypto market excluding BTC.
Institutional Demand and Crypto
In the first two weeks of the year, institutions invested $1.25 billion in crypto funds. This shows that the long-term outlook remains moderately positive with institutional demand, as we have not yet seen major outflows. We had written that the declines were triggered by nearly $4.7 billion in BTC sales on crypto exchanges (due to the drop in short-term expectations after the approval).
Even though demand in the US has weakened under current conditions, interest from Koreans is increasing. We can say this by looking at the Kimchi Premium Index, which measures the difference in Bitcoin prices between South Korean and global crypto exchanges. In the region, BTC is trading with a premium of nearly 4%, reflecting strong demand.
On the other hand, the Coinbase Premium Index has dropped into negative territory, which could indicate that sales are dominating in the US. In other words, while the US is selling, Korea is buying.
For BTC, the expected developments should revolve around new ETFs and positive news. A rapid increase in volumes or moves that would boost ETF incentives could reignite appetite.
