Bitcoin price pulled back on Friday, moving from a high of $97,770 on Thursday to the current $95,650. This retreat happened as crypto investors reacted to the stalled progress on the CLARITY Act in the Senate. This article explores why Bitcoin may still rebound in the near term.
CLARITY Act will likely pass despite the ongoing crisis
The main reason why Bitcoin has pulled back in the past few days is that investors are concerned about US regulations after the Senate Banking Committee decided to pause the planned markup of the Market Structure Bill, commonly known as CLARITY.
The committee did that after Coinbase, the biggest crypto company in the United States, withdrew its support after the text was released. Coinbase’s primary concern is that the bill limits the rewards that companies in the industry offer their stablecoin users.
Banks and credit unions have been fighting the ability for companies like Coinbase and Kraken to pay stablecoin rewards, warning that they could lead to capital flight from banking institutions.
Their argument is that such capital flight will leave them with less cash that they need to lend to Americans, a move that will affect the economy.
Still, there is a likelihood that the Senate will eventually pass the bill as it is widely supported by other companies in the crypto industry.
Bitcoin price has some key catalysts
Meanwhile, BTC price has some notable catalysts that will boost its performance over time. One of these catalysts is that Donald Trump has opted not to bomb Iran after the recent protests. As a result, the price of crude oil has pulled back, with Brent and West Texas Intermediate (WTI) falling to $63 and $60, respectively.
Falling crude oil price is a good thing for Bitcoin and other cryptocurrencies because it ensures that inflation is contained. Data released this week showed that the headline Consumer Price Index remained at 2.7% in December, while the core CPI fell slightly to 2.6%.
Therefore, most analysts believe that the Federal Reserve will deliver at least three interest rate cuts this year, more than the 2 that the dot plot showed
Spot Bitcoin ETF Inflows are rising
Meanwhile, data shows that American investors have continued accumulating Bitcoin ETFs. Data compiled by SoSoValue shows that the daily inflows rose by $100 million, bringing the weekly increase to $1.8 billion.
These funds have had net inflows of over $1.6 billion this month, bringing the cumulative total net inflows to $58.2 billion.
Increasing ETF inflows is a sign of more demand. At the same time, Michael Saylor’s Strategy has continued buying Bitcoin this year, a process that will continue in the future as it has billions of dollars in shares that it can sell to implement these purchases.
BTC price has strong technicals
The weekly chart shows that the Bitcoin price remains in a strong uptrend despite the recent pullback. It has remained above the ascending trendline that connects the lowest swings since January 2024.
The coin is also above the 100-week Exponential Moving Average (EMA), a sign that bulls remain in control. It is also nearing the middle line of the Bollinger Bands indicator.
Therefore, the most likely scenario is where Bitcoin continues the uptrend as bulls target the all-time high of $126,300, which is a 32% increase from the current level. The bullish outlook will remain as long as it is above the ascending trendline.