Bitcoin reclaimed $40,000 after breaking bearish on the level less than a month ago as traders assessed the cryptocurrency’s prospects of attracting new capital from corporates.
The BTC/USD exchange rate was trading for as high as $41,000 on Saturday, a move that put it at proximity with its recently-established record high of $41,986 (data from Coinbase).
As the session matured, the pair experienced a modest sell-off on profit-taking sentiment among day traders. Nonetheless, it was maintaining technical support near $40,000, providing the market adequate reasons to establish another record highs in the coming days/weeks.
Nasdaq-listed software firm, MicroStrategy, which holds a total of 71,079 BTC units roughly worth $2.82 billion, conducted an online conference with other public companies this week.
In doing so, the Virginia-based company attempted to woo corporates into purchasing Bitcoin as an alternative Treasury asset to cash or cash-equivalents. Professionals from more than 1,400 firms, including Elon Musk’s SpaceX, joined MicroStrategy CEO Michael Saylor for discussions.
It is not clear whether the convention turned corporates into bitcoin buyers. Nevertheless, data fetched by blockchain analytics firm CryptoQuant showed a dramatic spike in Coinbase Pro BTC outflows. In retrospect, a higher number of Bitcoin leaving the US cryptocurrency exchange indicate transfers to self-custodial wallets associated with Coinbase over-the-counter (OTC) services.
High-net worth individuals in the US use the Coinbase OTC service to purchase Bitcoin. Therefore, a higher outflow reading points to growing institutional interest.
On the day of MicroStrategy’s conference, the rate of BTC transfers to OTC addresses increased.
Meanwhile, Mr. Saylor left the following comment on Saturday after concluding the event two days ago.
“Our MicroStrategy World 2021 was a great success, with 22,031 registrants. The Bitcoin Corporations program attracted 8,197 attendees from 6,917 different enterprises.”
That might have played a crucial role in pumping the Bitcoin prices above $40,000.
Bitcoin Against Macro Risks
The recent run-up in Bitcoin prices faces headwinds from bullish dollar forecasts.
Climbing inflation expectations could push investors into the greenback as it trades higher against its major foreign counterparts. It is because the Federal Reserve would likely tighten its policy if it achieves its inflation target.
So far, the US central bank’s benchmark measure of consumer price growth — the Core Personal Consumption Expenditure (PCE) index — has grown above 1.5 percent YoY in December 2020.
“A larger-than-expected rise in consumer price growth, and a surprisingly positive GDP release, could diminish the need for further stimulus and in turn underpin the US Dollar against its major counterparts,” writes Daniel Moss, an analyst at DailyFX.
That could, in turn, push the Bitcoin prices lower in the short-term.