According to QCP Capital analysts, the Federal Reserve meeting on January 31 and the release of the US Treasury’s borrowing plans could impact the liquidity volume and consequently, the movement of the first cryptocurrency.
The experts are anticipating information on the Central Bank’s balance sheet reduction rate, which could potentially slow down and support liquidity in the system.
They also expect the US Treasury to continue their strategy of concentrating short-term securities placements for two reasons: first, it benefits the current administration and second, it allows for higher borrowing when interest rates are lowered in anticipation of the Fed’s key rate cut.
If this scenario plays out, it could have a positive effect on risky assets and cryptocurrencies.
The recent decrease in Bitcoin’s value below $40,000 was attributed to the pressure from GBTC liquidations, with an estimated remaining AUM of $21 billion and fear of Mt.Gox creditors exiting their positions, potentially resulting in an additional supply of 142,000-200,000 BTC.
CryptoQuant analysts also noted increased selling pressure from large cryptocurrency holders.