Bitcoin reclaims $37K as Rio De Janeiro allocates 1% of reserves to BTC

Rio de Janeiro to invest 1% of its treasury in crypto. Image from freepik
Rio de Janeiro to invest 1% of its treasury in crypto. Image from freepik

Key Takeaways:

  • Bitcoin (BTC) reclaims the $37,000 price level on Jan 27.
  • Brazilian city Rio de Janeiro seeks to invest 1% of its treasure reserves in crypto.

NEW DELHI (CoinChapter.com) — Bitcoin (BTC) prices seem to have reclaimed the $37,000 price level after closing above it for the second time in the week starting Jan 24.

However, concerning BTC’s price movement in the last seven days, Bitcoin is still 6.18% short of its price level a week ago, as per data from CoinMarketCap. BTC has fallen nearly 50% from its Nov ATH of $69,275, with the wider crypto market cap down $1.39 trillion in the same time frame.

BTCUSD price movement in the last seven days. Source: CoinMarketCap.com
BTCUSD price movement in the last seven days. Source: CoinMarketCap.com

Bitcoin prices have been on a wild ride in the current week, going from a low of $32,983 on Jan 24 to reach a high of $38,928 on Jan 26. The volatile price movement highlights the tussle between bears and bulls.

Bitcoin has immediate resistance around the $38,000 price level. BTC blasted through the level on Jan 21, flipping the support into resistance. However, key resistance for Bitcoin prices is at $40,500, near BTC’s 26-day exponential Moving Average line.

BTCUSD on the daily charts with RSI. Source: Tradingview.com
BTCUSD on the daily charts with RSI. Source: Tradingview.com

Meanwhile, the relative strength index is at the borderline of the oversold region, clocking 30.28 on the daily charts. Unfortunately, the expected trend reversal from an oversold RSI has eluded Bitcoin for now, with the weak price action leading traders to believe the BTC price has not reached a bottom yet.

Bitcoin MACD Giving Bullish Signal

The trend-based momentum oscillator MACD is in the bearish regions. However, the MACD histogram, which charts the difference between the MACD line (difference between 12-day and 26-day EMA) and the MACD signal line (9-day EMA of MACD), is charting contracting bars.

BTCUSD on the daily charts with MACD. Source: Tradingview.com
BTCUSD on the daily charts with MACD. Source: Tradingview.com

Contracting bars indicate the MACD line is moving upwards and might move above its signal line, charting a bullish crossover. As such, it is likely bullishness for BTC is increasing.

Recommended: Bitcoin to dive lower in the wake of the FOMC meeting, says analyst.

On the other hand, if Bitcoin continues to fall, immediate support is near $35,000. A sustained downtrend could push prices down to $33,300. However, key support is near the yet-to-be-tested $31,500 price level.

The $31,500 support level supported prices throughout the summer of 2021.

Meanwhile, Bitcoin’s correlation with the stock market is increasing, eating away at Bitcoin’s position as a hedge against inflation and market uncertainty.

Bitcoin correlation with the S&P 500. Source: Arcane Research
Bitcoin correlation with the S&P 500. Source: Arcane Research

Bitcoin’s correlation with the traditional financial market increased when the COVID-19 pandemic set in. In addition, institutional interest in Bitcoin increased as investors started to view BTC as a safe haven asset.

Interestingly, the digital gold narrative is likely the reason behind Bitcoin’s high correlation with the rest of the financial market.

Bitcoin In Brazil

Rio de Janeiro, Brazil’s second-most populous city, plans to allocate 1% of its treasury reserves to cryptocurrencies, Rio’s mayor Eduardo Paes said at the Rio Innovation Week.

Also Read: SEC gives a nay to Fidelity spot Bitcoin ETF amid ongoing BTC market decline.

The Secretary of Economic Development, Chicão Bulhões believes the decision would help Rio become a global crypto hub and lessen citizens’ distrust over cryptocurrencies. To recap, CNN Brazil had recently reported the police crackdown on an alleged pyramid scheme involving cryptocurrencies.

As a result, the credibility of cryptocurrencies took a hit, especially since the crypto market is an ever-evolving one. Hence, the involvement of a public institution like the government treasury would help restore confidence among the locals.

We are studying the possibility of paying taxes with an additional discount if you pay with Bitcoins. You take the discount off the single quota of 7%, it would be 10% if you pay in bitcoin

Finance Secretary Pedro Paulo said

In addition, the mayor also mentioned Portomara Valley, an area of ​​Porto Maravilha that offers a tax exemption for technology companies, which could attract future investments.

Lastly, Chicão Bulhões said he believes Rio would be a pioneer city in this matter, attracting firms from the southern regions of Brazil to the city with promises of tax incentives.

At the time of writing, BTC was trading at $36,267, down 2.5% on the day.

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Bitcoin, Bitcoin reclaims $37K as Rio De Janeiro allocates 1% of reserves to BTC

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