Bitfinex: Bitcoin Set To Consolidate As Volatility Decreases
In Brief
Bitfinex reveals that BTC reached a new ATH, but has since fallen below $100,000 amid concerns about competition from China in AI, US tariff hikes, and economic factors, while its correlation with equity markets continues to rise.
Bitfinex has shared its latest market analysis, noting that Bitcoin reached a new all-time high (ATH) of $109,590 on January 20th, spurred by optimism surrounding President Donald Trump’s inauguration and expectations of more crypto-friendly policies in the US. Speculation around initiatives like a strategic Bitcoin reserve and clearer regulatory frameworks contributed to this surge. However, Bitcoin faced challenges in sustaining this momentum and retreated below its previous ATH of $108,100, now trading under $100,000.
Bitcoin’s implied volatility has dropped by over 13% since reaching a peak on January 20th, following speculation about potential announcements on inauguration day and subsequent crypto-related executive orders by the President. A decline in implied volatility, coupled with stable or rising Bitcoin prices, typically signals a shift in market sentiment. When implied volatility falls, it suggests that traders perceive less risk and uncertainty, indicating confidence in the sustainability of current price levels. This decrease in demand for options as hedging tools reflects a market expectation of fewer significant price fluctuations in the near future. Lower implied volatility may also signal a consolidation phase, with Bitcoin trading within a narrower range until new catalysts—such as macroeconomic data, regulatory changes, or market events—arise to trigger a breakout or breakdown. In summary, the market seems to be entering a period of stability, with traders taking a more cautious, wait-and-see approach.
When Bitcoin surpassed the $100,000 mark for the first time last month, there was a notable increase in net capital inflows. However, these inflows have started to decrease as the market consolidates and adjusts to the new price level. This slowdown can be largely attributed to ongoing uncertainty around the potential impact of a Strategic Bitcoin Reserve (SBR) and some profit-taking activity. Although the rate of profit-taking has slowed, it indicates a reduction in sell-side pressure, which lessens the need for new capital to maintain prices within the current range.
Bitcoin’s Correlation With S&P 500 And NASDAQ Surges, While Asset Continues To Follow Equity Markets
Concerns have grown about competition from China in the AI space, along with the looming threat of potential tariff increases under the new US administration. Bitcoin’s correlation with the S&P 500 and NASDAQ has surged to new year-to-date highs, reflecting its increasing role as a major risk-on asset. Despite the S&P 500 hitting new highs last week, Bitcoin remains susceptible to shifts in market sentiment, liquidity conditions, and speculative trends.
According to the report, similar to other equity markets, Bitcoin showed caution following last week’s rate hike by the Bank of Japan. It continues to closely track equities, experiencing a sharp decline on January 27th amid growing concerns over China’s ability to produce more cost-effective AI models through Deepseek, as well as the potential imposition of tariffs on Colombia. Bitcoin options implied volatility dropped by 13% throughout the week, indicating that traders do not anticipate large price fluctuations in the near term.
On the macroeconomic front, labor market conditions remain stable, despite a slight uptick in unemployment claims, with continued claims reaching their highest level in over three years. Consumer sentiment, which had been improving for the past six months, has recently fallen. This decline is attributed to concerns over rising unemployment and inflation, partly driven by expectations of higher import tariffs and regulatory changes under President Donald Trump. These developments have contributed to an increase in inflation expectations, as markets worry about the broader impact of new policies on prices, Bitfinex highlights.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
