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Markets Report: Bitcoin primed for breakout as ether beats 2018 all-time high

Action focuses on altcoins but hope mounts for a resurgence in Bitcoin bullishness a day before Joe Biden’s inauguration

Bitcoin analysts were eagerly eyeing a fresh breakout on January 19 as BTC/USD hovered nervously around $37,000.

Data from price trackers including CoinMarketCap and TradingView captured investors’ anticipation as the day before the U.S. presidential inauguration saw three-day highs.

Trader bias shifts to upside for BTC

After hitting lows of $34,000 over the weekend, Bitcoin hovered roughly in the middle of its wide trading range between $30,000 and $40,000. As the week progressed, however, signs of bullish tendencies became more palpable.

“Bitcoin is currently compressing and expect upcoming volatility. Will watch break of the $39k level for more upside and $34k level for potential breakdown,” popular trader Josh Rager told Twitter followers as part of a market overview. 

“Compression here is an opportunity to trade alts to stake more sat[oshi]s. With no clear blow off the top and a nice bounce after a 28% pullback – my current bias for Bitcoin price action is more upside after this compression. $50k+ is likely where we’ll see more retail buyers jump in.”

His optimism was echoed by various others, including quant analyst PlanB, who noted that Bitcoin may set a dramatically higher monthly closing price in order to adhere to historical behavior as tracked by his stock-to-flow model.

“A larger monthly jump to #bitcoin $48K would create a nice gap between monthly dots,” he tweeted, adding that this would also trigger a “point of no return” for price action.

At press time, BTC/USD hovered at around $37,000 with the level nonetheless failing to cement itself as obvious support.

The picture was much rosier for largest altcoin ether, meanwhile, which on Tuesday finally beat its all-time highs of $1,428, which had been in place for more than three years.

ETH/USD sets a new record high at last. (Photo: TradingView)

Analyst: Wall St. Bitcoin centralization “one-way model”

Bullishness on short and long timeframes came amid renewed buy-ins from some familiar largescale hodlers.

On Monday, asset manager Grayscale purchased a total of 16,240 BTC, adding around $600 million to its holdings. For comparison, miners released roughly 18 times less BTC during the same 24 hours, highlighting the supply crisis in Bitcoin which is only increasing.

“Yesterday, @Grayscale raised north of $700 million into its family of products…momentum from Q4 seems to (be) picking up speed into the new year,” the company’s new CEO Michael Sonnenshein summarized, adding that January 15 was its largest single asset raise day in history.

As various sources noted, the latest purchase took Grayscale’s total Bitcoin stash to 3% of the overall supply. Its combined assets under management across its cryptocurrency funds stood at just under $24 billion. 

Commenting on the move, Charles Edwards, founder of Capriole Investments, offered a more sobering take on the wealth transfer phenomenon underway in the Bitcoin ecosystem. Large institutions would be locking away investments for the long term, he suggested, adding:

“Grayscale already owns 3% of all circulating Bitcoin. Their holdings are growing around 10% a month. At this rate they could hold 10% of ALL Bitcoin in 2021. The centralization of Bitcoin has moved from exchanges to Wall St. The difference is, this is a one-way model.”

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Anthony Bevan is a journalist focusing on disruptive finance and cryptocurrency, along with the changing face of the market as Bitcoin gains mainstream adoption. Journalists covering cryptocurrency for Modern Consensus May hold positions in some of the currencies they write about.