As the market bounces there has been a surge of discussions, on social media particularly about the recent news concerning ETFs. It is anticipated that in the days we may hear news of the approval of a spot ETF. As we enter the year there is renewed excitement in the market as Bitcoin BTC -2.32% successfully crosses the $45,000 threshold. Interestingly over 90% of Bitcoin addresses are now making profits.
Moreover I came across a tweet from Matrixport that caught my attention. They emphasize their prediction that Bitcoins price could reach $50,000 this month. They believe that there is a possibility for an announcement regarding the approval of a Bitcoin spot ETF – sooner than many anticipate around January 8th 10th. If this occurs it is expected that Bitcoins price will experience a surge and they do not foresee any impact like a ‘sell the news scenario.
Some experts like Cryptocon and Stock Money believe there might be around a 30% retracement in Bitcoins price. However despite differing opinions in the market there remains consensus on the term outlook, for Bitcoin. Short term price drops do not hinder expectations of reaching the $100,000 price target.
Furthermore Matrixport has highlighted that if a Bitcoin spot ETF is approved it would validate its status, as an asset class for portfolios. This would also allow it to be used as collateral for acquiring assets. With an influx of fiat capital ranging from $5 to $10 billion into the Bitcoin market there is an expectation of price increase. However this surge in demand might lead to challenges in meeting the exposure requirements of Bitcoin exchanges due to a number of Bitcoin holders moving their assets from exchanges to wallets after the 2022 FTX crash. As a result 70% of circulating Bitcoins have remained stagnant over the year.
Another contributing factor causing a contraction in supply is the Bitcoin halving in April. When buyers are willing to pay prices but sellers refuse to sell at those levels it leads to a surge, in Bitcoins value.
Based on these factors Matrixport predicts that Bitcoin will reach $50,000 by January and suggests that during halving cycles of Bitcoin and coinciding with the US election cycle prices tend to rise. This years projection sets a target at $125,000.
In terms of Tethers involvement they have actively been accumulating Bitcoin. Tether is a stablecoin tied to the US dollar. Aims at providing stability within the cryptocurrency market.
According to reports Tether has actively invested in the Bitcoin market by using its operating profits, which include purchasing US Treasury bonds. As a result Tether has amassed 66,000 Bitcoins. Has now become one of the ten Bitcoin holders worldwide.
Stablecoins, like Tether play a role in maintaining stability and confidence in the cryptocurrency market. This investment strategy not benefits Tether financially. Also has a significant impact on the entire cryptocurrency ecosystem.
In the world of cryptocurrencies reducing supply and token burning are mechanisms used to regulate market supply and demand. These mechanisms work by decreasing the number of tokens in circulation thereby increasing their scarcity and potentially affecting their price. In this context when investors use USDT to buy Bitcoin they are participating in a market cycle. As the price of Bitcoin increases investors require USDT to acquire the desired amount of Bitcoins. This creates a dynamic within the market that could indirectly lead to a decrease, in Bitcoins supply.