While fund provider CoinShares suspects profit-taking by institutional investors for Bitcoin, Polkadot (DOT) can underline its strong perfomance of the last weeks. Market Update.
The bitcoin price remains in a crawl – with a tenuous negative sign. At the time of writing, the No. 1 cryptocurrency is trading at $34,570. Within the last 24 hours, BTC is thus down about 2 percent.
The bitcoin price over the last 24 hours. Left: Trading volume in BTC. BTC was able to recover from the drop to 33,500 USD – but not much more.
In order for it to go up again, the bulls must first recapture the resistance at USD 35,000. Otherwise, a slide to the next support at 33,770 USD is imminent. A detailed description of the bullish and bearish scenarios for the bitcoin price can be found in the current price analysis.
Are the “Instis” pushing the Bitcoin price?
The fact that the Bitcoin price is currently struggling to sustainably overcome the 35,000 U.S. dollars could go hand in hand with increased selling pressure from institutional investors, namely in the form of crypto investment funds. Fund provider Coinshares did note an inflow of $359 million into crypto funds in its weekly asset flow report for last week – a level last seen in the run-up to Christmas. However, funds also sold crypto assets – led by bitcoin – for the second week in a row, this time to the equivalent of $85 million. Coinshares is assuming profit-taking here, looking to profit from the recent sharp rise in the Bitcoin price.
Strong dollar = weak bitcoin?
Coinshares provides another explanation with an allegedly increased Trade Weighted US Dollar Index. This metric, developed by the Federal Reserve, determines the purchasing power of the U.S. dollar by comparing it to a basket of 26 fiat currencies.
Last week also saw an appreciation of the trade-weighted US dollar, which typically correlates inversely with the bitcoin price, which could also be the reason why some investors are taking profits,
the Coinshares report states. Whether the Trade Weighted US Dollar Index (DTWEXBGS) really offers a sufficient explanation for the profit-taking by institutional investors, however, is a question mark. The Fed data at least do not yet speak the language of a strengthening U.S. dollar. Only in comparison to the first week of January, a small growth in the DTWEXBGS can be observed. However, the index is still far from the pre-pandemic level.
Polkadot remains bullish
With the meager daily balance, Bitcoin finds itself in good company within the top-10.
The top-10 cryptocurrencies by market capitalization. Source: BTC-ECHO
Of the top ten cryptocurrencies by market cap, only Polkadot (DOT) is posting notable gains at the time of writing. Currently, DOT is trading at $16.84 USD.
Against the U.S. dollar, DOT thus gained 6 percent on the day. The increase in DOT/BTC was even more significant: Here, the crypto network, which is designed for interoperability, was able to gain almost 8 percent. Thus, DOT seems to continue its impressive performance of the last 30 days for the time being – even if DOT has so far cut its teeth at the 18 US dollars. In view of the price gains of more than 240 percent in the last month, a timely correction should not surprise anyone.
The fact that, in addition to Polkadot, Cardano (ADA) and VeChain (VET) continue to perform solidly indicates the unbroken popularity of proof-of-stake networks.