Bitcoin price risks falling to $21,000, US Fed rate hike isn't the reason

CoingapePublished on 2023-02-01Last updated on 2023-02-01

Abstract

Bitcoin price risks entering the bear market again as supply of stablecoins continues to fall in the crypto market.

Bitcoin price enjoyed a 40% rally in January, turning the crypto market bullish. The positive sentiment among traders caused the crypto market to recover over a $1 trillion market cap. Traders await the U.S. Federal Reserve rate hike decision and Chair Jerome Powell’s outlook on the economy to decide their trades for the next few weeks.

Bitcoin price continues to trade near the $23,000 level as bulls and bears fight to maintain their dominance ahead of the Fed policy decision. The 24-hour low and high for Bitcoin are $22,884 and $23,225, respectively.

Bitcoin Price Risks Turning Bearish Again


According to on-chain analysis, the circulating supply of stablecoins is decreasing in the crypto market. Stablecoins can be described as the liquidity of the crypto market.


In 2020, a massive increase in the supply of stablecoins resulted in a bullish crypto market. However, the supply of stablecoins dwindled since February 2022, causing a bear market that ended the journey for many crypto companies such as crypto exchange FTX.

Bitcoin: Stablecoins Circulating Supply. Source: CryptoQuant

“”

In January 2023, a short-term increase in the circulating supply of stablecoins led to a 40% rise in the Bitcoin price. However, a death cross between stablecoins circulating supply of MA 21 and MA 100 is likely to happen again. It will cause the Bitcoin price to fall.

If the circulating supply of stablecoins does not increase further, the crypto market will enter a bear market again. It will impact investor sentiment massively.

U.S. Fed Rate Hike Decision


The U.S. Fed raised interest rate by 425 bps last year, with four consecutive 75 bps rate hikes and a 50 bps rate hike in December. The market expects a further slowdown in rate hike to 25 bps due to cooling inflation, strong jobs data, and an increase in the U.S. GDP growth rate at 2.9% in the fourth quarter.

According to CME FedWatch Tool, there’s a 99.3% probability of a 25 bps rate hike by the U.S. Fed rate hike. The U.S. Dollar Index (DXY) shows increased volatility ahead of the Fed policy decision, risks fall in Bitcoin price.


Christopher J. Waller, a member of the Federal Reserve Board of Governors, asserts the Fed needs six months of data, not three months of positive data to consider a pivot. Thus, the Fed is likely to pause the rate hike before their May 2-3 meeting.

Related Reads

The Full Story of How Crypto Unicorn Blockstream Is Mired in Serious Fraud Allegations

This article details serious allegations of fraud against Bitcoin infrastructure company Blockstream, founded by Bitcoin pioneer Adam Back. In June 2024, investigative account NatInfoSec published a report accusing Blockstream's mining note (BMN) program of potentially operating a multi-billion dollar scheme with Ponzi-like characteristics. The core allegations focus on Blockstream Mining Notes (BMNs), which offer investors fixed annual yields up to approximately 20% from Bitcoin mining. NatInfoSec's investigation raises several key issues: 1. **Suspicious Hashrate & Payout Capacity**: The analysis suggests Blockstream would need 20-45 EH/s of mining power to cover its BMN obligations, but its public dashboard shows only around 15 EH/s. Furthermore, no verifiable public evidence (e.g., grid connection records, import data) was found to support the massive mining operation required. 2. **Questionable Payout Source**: The BMN contract allows Blockstream to use Bitcoin from *any source* (Substitute Performance BTC) to fulfill investor payouts, raising concerns that payouts may not come from actual mining revenue. 3. **High-Risk, Fixed Returns**: Offering ~20% fixed yields in the volatile, cyclical Bitcoin mining industry is viewed as highly unusual and requires clear explanation. 4. **Undisclosed Criminal Record of Key Figure**: Christopher William Cook, a key figure in Blockstream's mining operations and CEO of spin-off Exacore, was found to have a federal felony conviction for mail fraud in 2008, a fact not disclosed in BMN offering documents. His background was also allegedly embellished. 5. **Potential Contagion to BSTR SPAC**: Questions were raised about whether these liabilities and Cook's record should have been disclosed in the SEC filings for Bitcoin Standard Treasury Company (BSTR), a separate Adam Back-associated firm planning a SPAC merger. The crypto community is divided. BitMEX Research validated Cook's criminal record and expressed concern over the high yields but found other evidence lacking or misleading, noting the legal separation between BMN, Blockstream, and BSTR. Blockstream defenders, like Samson Mow, argue the mining is real. Critics, however, emphasize the lack of independent, verifiable proof of the mining operation's scale and the true source of investor payouts. The article concludes that BMN remains shrouded in key unanswered questions regarding its actual size, the verifiability of its underlying mining assets and payouts, the source of its high yields, and the full role and disclosure concerning Chris Cook. Blockstream had not issued a comprehensive response at the time of writing.

marsbit3h ago

The Full Story of How Crypto Unicorn Blockstream Is Mired in Serious Fraud Allegations

marsbit3h ago

South Korea Targets 40 Unregistered Crypto Operators in Regulatory Crackdown

South Korea's Financial Intelligence Unit has referred around 40 unregistered virtual asset service providers to the police as part of a regulatory crackdown. Under local law, all crypto exchanges must obtain ISMS certification and FIU registration before operating, yet only 28 entities are currently registered. The FIU identified methods used by offshore platforms to attract Korean users, including advertising on local messaging apps and using private money changers to convert stablecoins. Officials stressed that unregistered platforms are not protected by Korean law. This action aligns with South Korea's push for stricter global crypto compliance through FATF measures. FIU Director Lee Hyung-joo recently urged FATF members to remove transaction thresholds for the "Travel Rule," as South Korea plans to mandate identity checks for all crypto transactions starting in August, expanding from the current 1 million won (≈$730) minimum. Regulatory enforcement has intensified in 2026, with authorities pursuing criminal cases against market manipulation schemes and enhancing cooperation with financial institutions to curb cross-border illegal transactions.

TheNewsCrypto4h ago

South Korea Targets 40 Unregistered Crypto Operators in Regulatory Crackdown

TheNewsCrypto4h ago

The Full Story Behind Encryption Unicorn Blockstream's Deep Entanglement in Serious Fraud Allegations

This article details allegations of serious fraud surrounding the crypto company Blockstream, founded by Bitcoin pioneer Adam Back. Investigation account NatInfoSec accuses Blockstream of raising billions through its Blockstream Mining Note (BMN) products, which offer high fixed yields of up to 20% from purported mining revenue. The core allegations are: 1) Blockstream's public mining hash rate (15 EH/s) appears insufficient to cover the massive payout obligations from sold BMN notes, raising questions about the true source of investor payouts. 2) Key executive Christopher William Cook, central to the mining operations, has a prior federal conviction for mail fraud, a fact not disclosed to investors. Cook's background and lavish lifestyle are highlighted as red flags. 3) The structure allows payouts from any source of BTC, not necessarily mining revenue, which critics argue gives it Ponzi-like characteristics. The controversy also touches on Bitcoin Standard Treasury Company (BSTR), a related entity planning a SPAC上市. Critics question whether BMN's liabilities and Cook's record should be disclosed in BSTR's filings. BitMEX Research offered a tempered analysis, confirming Cook's criminal record is likely true and the high yields concerning, but found other claims like insufficient抵押证据 less substantiated. Community debate centers on the need for verifiable proof of Blockstream's mining output and revenue. The article concludes that while fraud is not proven, BMN presents significant, unresolved questions regarding its actual scale, the source of its high fixed returns, the verifiability of its mining operations and payouts, and the full disclosure of associated risks and personnel backgrounds. Blockstream has not yet issued a formal response.

链捕手4h ago

The Full Story Behind Encryption Unicorn Blockstream's Deep Entanglement in Serious Fraud Allegations

链捕手4h ago

Trading

Spot
Futures
活动图片