Decentral Block Post

Traders tend to lighten up positions before important events because they hate uncertainty. The United States Federal Reserve’s policy decision is on Feb. 1, where the central bank is expected to hike rates by 25 basis points.

Market observers will keenly watch for any hints about how high the rates could go. That could be one of the reasons for the profit-booking in Bitcoin (BTC) and select altcoins on Jan. 30. 

Bitcoin’s sharp recovery in January could also be signaling the start of a new bull market, according to certain on-chain metrics. The Profit and Loss Index from on-chain analytics platform CryptoQuant has given its first buy signal since 2019.

Blockware Solutions head analyst Joe Burnett believes that Bitcoin will not break above its all-time high of $69,000 until the next Bitcoin halving which is scheduled to occur in March 2024. Burnett anticipates Bitcoin’s next bull market top to be between $150,000 to $350,000, which isa massive increase from the current levels.

What are the important support levels to watch out for in Bitcoin and the altcoins? Let’s study the charts to find out.

Bitcoin mining stocks usually follow BTC’s price because it directly influences the company's earnings. These stocks were beaten down heavily in the last quarter of 2022, especially in the month of December. The downturn after FTX's collapse worsened with the bankruptcy filings of the largest U.S.-based Bitcoin mining company, Core Scientific.

During this time, other mining stocks, like Marathon Digital Holdings (MARA) in the chart below, exhibited a weak correlation with Bitcoin’s price, suggesting that December’s downturn was probably overblown.

The negative trend reversed at the start of 2023 as most mining stocks posted impressive gains. The Hashrate Index mining stock index, which tracks the average price of publicly listed mining and hardware manufacturing companies, increased by 62.5% year-to-date. The positive price spike also restored the strong correlation between BTC price and mining stocks.

However, the mining industry remains under stress, with low-profit levels expected for prolonged periods. Since Q2 2022, mining companies have funded operations selling BTC from reserves, selling newly mined BTC, raising debt and issuing new shares. Unless Bitcoin’s price consolidates above $25,000, the industry will likely witness a few takeover attempts or further treasury sales to pay off debt.

Some mining companies are operating at a loss

Currently, the top mining companies' price-to-earnings (PE) ratio is negative, suggesting that they're operating at a net loss, making their stock prices vulnerable to steep downturns.

Bitcoin (BTC) struggled to maintain bullish momentum on Jan. 30 as the countdown to the monthly close kept the market nervous.

BTC price sees flash dip below $23,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD coming off its latest highs at just below $24,000 on the day.

These, while Bitcoin’s best performance for nearly six months, encountered problems with staying power as the week began, with pre-Wall Street trading seeing a brief trip below $23,000.

At the time of writing, Bitcoin traded at around $23,250 as United States equities limped into the final few days of January.

Among the topics of interest for analysts was the CME Bitcoin futures gap from the weekend getting swiftly “filled” by spot.

USD Coin (USDC) issuer Circle has released an accountant-verified report of its treasury reserve holdings backing more than $44.5 billion worth of tokens currently in circulation.

Circle’s December 2022 reserve report, which was reviewed by GrantThornton accountancy group, breaks down the current make-up of the stablecoin issuer’s reserve vault. According to Circle, 44,553,543,212 USDC is currently backed by $44,693,963,701 U.S. dollars held in custody accounts.

It is worth noting that a significant portion of the latter amount is invested in a variety of U.S. Treasury bonds. As per Circle’s VP of accounting Timothy Singh, the fair value of assets in the USDC reserve is the total balance of USD denominated assets, including a mix of cash and treasury bonds.

Circle’s Reserve Fund is registered as a government money market fund. The equity interests in the fund are fully owned by Circle and include 14 different US Treasury Bills valued at over $23.5 billion. The fund also holds $48.9 million in cash while a further $33 million is due to the Fund, offset by ‘timing and settlement differences’.

Related: Stablecoin settlements can surpass all major card networks in 2023: Data