Following a relatively predictable interest rate meeting by the U.S. Federal Reserve, Bitcoin‘s price action has turned bullish again. On January 30, Bitcoin rose to $106,500, marking a positive breakout, according to Cointelegraph’s Biraajmaan Tamuly.
Bitcoin regains momentum
Immediately after the US Federal Reserve’s interest rate meeting, the futures market saw an increase in open interest of $1.2 billion.
This is a logical reaction. Markets like security, and that is exactly what the US Federal Reserve has provided. For now, we have to make do with the current interest rates. Unlike in December, there were no new surprises.
Therefore, open interest increased by 8%, reaching a level of $65 billion on January 30.
This also led to an increase in the funding rate – the cost investors pay to open such positions.
So while the futures market appears to be bullish for Bitcoin again, there is one specific data series that is behaving differently than in the previous cycle.
Bitcoin is too expensive
This is about private investors. Data from Glassnode shows that they are currently spending 48% less than they will in November 2024. Despite a BTC price of $100,000, there does not seem to be any hype here yet.
According to Sunny Po, an anonymous BTC proponent, the so-called “unit bias” is currently a problem for the digital currency. Investors prefer to own “a lot” of something.
You now pay over $100,000 for one BTC – for many investors, this feels expensive and unaffordable. When they can no longer buy multiple Bitcoins, they often switch to “cheaper” coins.
To the normie, bitcoin isn’t the fastest horse in the race, it’s actually the slowest.
This will be the case even at $1M bitcoin while their chosen horses go to 0.
Unit bias is a core foundational framework of the normie mind. “Cheaper better”
For this reason, Po believes that many investors are betting on XRP, for example. Its price is significantly lower, but this is because there is a lot more XRP in circulation.
Ultimately, it’s the total market capitalization of a project that counts, not the price per coin. Predictions that XRP could reach $1,000 or $10,000 seem more realistic than a BTC price prediction of $10 million – but it’s the same effect.
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