Author: BitpushNews
After reaching a historic high of $109,225 on the day of Donald Trump's inauguration, the price of Bit on Wednesday afternoon fell slightly to $103,576.49, a 2.2% drop in 24 hours, but is still up 9% so far this month.
At the same time, BlackRock CEO Larry Fink expressed an optimistic outlook on digital currencies, especially Bit, at the World Economic Forum in Davos.
Fink said that as investors' concerns about currency devaluation and political and economic instability increase, the demand for Bit as a hedge asset is constantly rising. He even boldly predicted that if more institutional investors allocate 2% to 5% of their assets to Bit, the price of Bit could reach $700,000.
He said: "This week I was talking to a sovereign wealth fund, and the discussion was, 'Should we allocate 2% or 5%?' If everyone went to that view, Bit could be $500,000 to $600,000 to $700,000 per Bit."
Larry Fink said: "So I'm a big believer in using it as a tool," and added that he was not trying to promote Bit.
Inflation Concerns Remain
Although the US annual consumer price index (CPI) rose 3.2% year-on-year in 2024, slightly lower than the expected 3.3%, some investors and analysts believe that the CPI based on a basket of common household items does not accurately reflect the true rate of inflation.
A shareholder proposal submitted to Meta this year calls for the company to hold Bit as a reserve asset, arguing that the true rate of inflation may be double the published CPI data.
The National Center for Public Policy Research, a think tank that advocates free markets, submitted the same shareholder proposal to Amazon last December, with the same reasoning.
The think tank said the average CPI inflation rate over the past four years was about 4.95%, peaking at 9.1% in June 2022. "In fact, the true rate of inflation is much higher, with some research estimating it to be close to double the CPI at times. Therefore, companies' assets need to appreciate at these rates to remain profitable."
Larry Fink also issued a warning about inflation, saying he is concerned that inflation may rise over the next 12 months and warned that it would be dangerous to believe that inflation levels have peaked.
Generally speaking, if the US dollar continues to strengthen and interest rates continue to rise, it will pose a headwind to most risk assets, including Bit.
Where Will Bit Go Next?
Martin Leinweber, Director of Digital Asset Research and Strategy at index provider MarketVector Indexes, told MarketWatch that although Bit has set a new high above $109,000, it has mostly been trading between $92,000 and $106,000. The crypto market is waiting for the next catalyst, whether it's an announcement about a US strategic Bit reserve or the imminent approval of certain Altcoin ETFs.
So far, US regulators have only approved Bit and Ether ETFs. Several asset managers have filed applications to invest in Solana, XRP, Dogecoin and even a Trump ETF, and 21Shares crypto research strategist Matt Mena said the SEC's new crypto task force is expected to accelerate the approval of such ETFs.
Mena commented: "The approval pathway for crypto ETFs is becoming more structured and formalized, which can unlock new capital inflows from institutional and retail investors who have long lacked familiar, regulated investment vehicles to access these assets."
Trump repeatedly vowed during his campaign to establish a strategic Bit reserve in the US, and Joe McCann, CEO of crypto investment firm Asymmetric, said in a recent interview that while the president has not detailed any specific plans for the reserve, one possibility is that the US stops selling Bit seized from illegal activities, which would alleviate market selling pressure.
Leinweber pointed out that from a technical perspective, Bit's next target is between $118,000 and $120,000.
Fairlead Strategies founder Katie Stockton recently conducted an in-depth analysis of the Bit market. She noted that while Bit's short-term performance has improved, multiple technical indicators suggest the market is overbought. Stockton emphasized: "Unless Bit can strongly break above the $108,300 key resistance level, we advise investors to hold off on blindly increasing their positions." She explained that a "decisive breakout" means Bit's price needs to break through this level with strong momentum, not just briefly touch it and then retreat.
Although the market may experience volatility in the short term, Stockton remains optimistic about Bit's long-term prospects. She said: "Our monthly technical indicators show that Bit is still in a long-term bullish cycle. Therefore, we believe the current consolidation period is just preparing for a bigger upward move in the future."
Crypto trader Krillin hinted on the X platform that Bit's price may consolidate between $100,000 and $110,000 before the Federal Open Market Committee (FOMC) meeting on January 28-29. The analyst said: "Unless there are some unexpected events, such as the Bank of Japan taking some surprising monetary policy actions, we may oscillate between $100,000 and $110,000 until the FOMC meeting at the end of this month."
The analyst pointed out that since a rate cut is not expected on January 29, there is a possibility of another sell-off, as the Chicago Mercantile Exchange FedWatch tool currently predicts a 99.5% chance that rates will remain unchanged at 4.25% to 4.5%.
