On Tuesday, the crypto market went crazy with euphoria as Bitcoin rose from a daily low of around $22,800 to over $26,300. This move came as assets in the space began to regain their footing following the bank crisis that affected USDC, one of the largest stablecoins in the space. The BTC rally has since cooled, correcting downward by over $1,500 in the last day, but this does not mean that the rally has come to an end.
Reasons Behind BTC’s Monster Rally
On Monday, March 13, Changpeng “CZ” Zhao revealed that his exchange Binance was moving $1 billion in BUSD from the exchange’s SAFU into other assets such as Bitcoin, Ethereum, and BNB. This came not long after BUSD’s issuer Paxos was ordered by the Securities and Exchange Commission (SEC) to stop issuing new tokens.
Given the changes in stable coins and banks, #Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH. Some fund movements will occur on-chain. Transparency.
— CZ
Binance (@cz_binance) March 13, 2023
The buying spree by Binance no doubt put immense buying pressure on the market, driving up demand, and leading to the rapid price increase that was experienced. The positive sentiment surrounding the market also spread with the CPI data release which implies that the announcement was already priced in. With an inflation rate of 6%, the market easily shook it off and continued on its way.
However, over the last 12 hours, there has been a slowdown in the market. This most likely stemmed from investors taking profit with over 72% of all BTC wallets now sitting in profit. This caused Bitcoin’s price to fall below the $25,000 level, putting it in a position for prime resistance from the bears, but the digital asset is likely not done.
There Could Be More Bitcoin Buys Coming
Sitting at the $24,000 region, Bitcoin is still at a great buying opportunity level for investors. Given that the digital asset’s all-time high price is $69,000, there is still a lot of runway for investors looking to make money.
The Tether USD (USDT) inflows for the last day also point toward this, with over $1.8 billion flowing into exchanges. Now, when stablecoin inflow into exchanges is high, it points to buying pressure as investors are picking up coins so they do not miss the pump. This is because investors tend to move into stablecoins to avoid volatility, and when they move these coins back into exchanges, it is usually with the intention to convert to Bitcoin and other cryptocurrencies.
Daily On-Chain Exchange Flow#Bitcoin $BTC
$1.9B in
$1.7B out
Net flow: +$273.2M#Ethereum $ETH
— glassnode alerts (@glassnodealerts) March 15, 2023
Investor sentiment has also improved drastically with the Fear & Greed Index moving back into Greed with a score of 56 on Tuesday. It has now moved back into the neutral territory but with BTC above $24,000, it still skews toward greed, a time when investors are more confident about the market.
As long as there are no more devastating occurrences like a bank with large crypto exposure collapsing or a prominent crypto firm going bankrupt, then Bitcoin is likely to continue its rally and reclaim $25,000 once more before the trading day is over.
