Bitcoin finds support as Coinbase premium index recovers

Bitcoin continued its price rise throughout the weekend, reaching $98,300 after finding critical support at $91,405.

The largest cryptocurrency by market cap has risen for six consecutive days, coinciding with ongoing demand and supply dynamics.

On the supply side, mining difficulty and hash rate metrics have risen to record levels since the last halving event in April. This trend pushed the coin’s inflation rate to 1.11%, well below the US consumer price index figure of 2.7%.

While the amount of Bitcoin (BTC) on exchanges continues to decrease, it is below 12% compared to 2016.

Bitcoin annual inflation | Source: intoTheBlock

On the other hand, demand is increasing as ETF inflows continue. These funds accumulated over $128 billion in assets, and BlackRock’s IBIT was over $54 billion.

MicroStrategy also continued its buying spree and currently holds more than 450 tokens. Polymarket users expect the company to have more than 500,000 tokens by March.

There are signs that American investors are buying more Bitcoin. In addition to ETF purchases, the data shows that the Coinbase Premium Index has rebounded from a sharp decline in December.

It rose to minus 0.021 from minus 0.24 in December, according to CoinGlass.

Coinbase Bitcoin Premium | Source: CoinGlass

Another data from CryptoQuant shows that the index broke above the 14-day Simple Moving Average after 26 days; This is a positive sign for prices.

Bitcoin Coinbase Premium | Source: CryptoQuant

The Coinbase Premium Index is a key figure examining purchases by American investors, including institutions. Coinbase is the most widely used exchange in the United States, so when it rises, it likely signals the accumulation of the largest pool of capital.

Additionally, Bitcoin faces other fundamental catalysts, including the inauguration of President-elect Donald Trump and the upcoming $16 billion FTX distributions.

There is a possibility that some of the buyers of these funds will invest in Bitcoin and other coins. Additionally, as crypto.news reported last week, Bitcoin’s MVRV remains low; This is a sign that Bitcoin is undervalued.

Bitcoin price analysis Bitcoin price chart | Source: crypto.news

The daily chart shows that BTC has recovered over the past few days. It has risen over the last six days and has consistently remained above the 50-day moving average.

Bitcoin also found significant support at the key support at $91,400, below which it has failed to break several times since December.

Therefore, there is a chance that the rise will continue as the bulls target the all-time high at $108,000. A move above this level would indicate more gains, potentially to the 38.2% Fibonacci Retracement point at $114,000.

However, creating the head and shoulders formation is risky. This could lead to a bearish trend below $91,400.

Analysts’ bearish sentiment

WhaleWire analyst Jacob King recently issued a stark warning about Bitcoin and the broader crypto market, citing signs of a potential bear market.

In a post on social media, King noted several developments, including MicroStrategy reducing its Bitcoin purchases, El Salvador’s apparent shift away from crypto-focused policies, and BlackRock selling significant BTC holdings.

MicroStrategy’s BTC purchases are becoming smaller and face extreme risks. El Salvador is reversing its Bitcoin policies, BlackRock is selling a record amount of BTC, and Tether has mysteriously not produced anything new for over 20 days, causing BTC to stagnate.

This…

— Jacob King (@JacobKinge) January 3, 2025

King criticized MicroStrategy’s strategy as a “giant scam” and unsustainable. He also noted that Tether (USDT) paused the printing of new coins for more than 20 days, which coincided with the coin’s recent price recession.

Labeling the situation as the “calm before the storm,” King warned that a downturn in crypto could align with a broader stock market crash and urged investors to reassess their risks.

At last check on Sunday, BTC was trading at $98,035.