BlackRock Buys $30M BTC, But Bitcoin Price Unaffected; 5 Factors Behind the Consolidation

Bitcoin price performance is a critical factor in the cryptocurrency market, and its moves alone could decide the trajectory of the entire market. Ever since it created an ATH in mid-January, the BTC token has been continuously consolidating despite Blackrock buying news.

BlackRock purchased an additional $30 million in Bitcoin (BTC), but the cryptocurrency's price remains largely unaffected. Here's a closer look at what's happening and the possible factors behind BTC's stagnant price action.

BlackRock's recent Bitcoin purchases have been a hot topic in the crypto space. The world's largest asset manager has been snapping up BTC since August 2022, and its latest purchase brings its total Bitcoin holdings to over $2.3 billion.

BlackRock's entry into the crypto market is a significant endorsement of the digital asset class, and its continued purchases could help boost institutional demand for Bitcoin. Especially considering that BlackRock manages over $10 trillion in assets.

After Surging 1,000% In 2023, This Crypto Could Rally Another 700% Past Key Resistance

But despite BlackRock's buying spree, the Bitcoin price has shown a muted response. As of Monday morning, BTC's price trades at $102,600, showing a 0.2%-0.3% drop daily. In comparison, the cryptocurrency logged gains of up to 2% on the daily chart last week.

Moreover, the 24-hour trading volume has also declined by 33%, and BTC's price now hovers around the lower support level. At the same time, it faces resistance at the 50-day moving average (DMA). Let's delve into the possible reasons behind Bitcoin's stagnant price.

5 Possible Reasons For Bitcoin's Stagnant Price In Sight, FOMC Meeting, a lack of bullish sentiment among investors, and many other factors could be contributing to Bitcoin's ongoing behavior. However, these barriers are likely temporary, as the power law model projects the token on a trajectory that could see the BTC price reaching $200K by 2025.

1. FOMC Meeting And Lack Of Interest Rate Cut Hopes

The US Federal Open Market Committee (FOMC) is set to meet today to discuss interest rates. Usually, during such meetings, there's speculation about interest rate cuts, which helps generate bullish sentiment in the market.

However, this time around, the CME data indicates very low odds of an interest rate cut, which could be keeping the market participants subdued. Such macroeconomic events tend to influence the prices of digital assets and also impact investor sentiment.

2. Investors Lacking FOMO Sentiments

A major factor that contributes to a token's rally is the presence of FOMO among investors, which indicates their excitement to join a bull run. It is also a key metric and is directly proportional to the UTXO (younger unspent transaction outputs) younger unspent transaction outputs (UTXOs) or the age of the last spent output in a transaction. This peaks during a bull run and has peaked in 2013, 23017, and 2021.

At present, the UTXOs are nowhere near their peak. Although it has been increasing, it has not reached the top, which indicates that the speculative frenzy needed for a sharp uptrend is missing, despite new participants entering the market.

Moreover, long-term holders have been adding to their hodling, which helps sustain the consolidation trend.

3. New Holders' Low Bitcoin Holdings Impacting Price Trajectory

Usually, a bulk of an investor's crypto holdings are acquired during the bull market, and such investors tend to sell their tokens early on during a bear market. Hence, the younger the coins in circulation, the higher the selling pressure.

In this case, however, the younger coins, which changed hands less than 150 days ago, comprise only 26% of the total circulating supply, which is lower than the 35% during the 2021 bull market. This indicates that a majority of BTC's price gains are yet to come.

4. Macroeconomic Conditions And Institutional Investors In The Picture

Bitcoin has been touted as an inflation hedge, and such narratives have been doing the rounds since 2021. However, a recent study by Glassnode suggests that there's no correlation between the two.

This could be because the US inflation rates are calculated differently from the CPI, which is used to measure the cost of living. Hence, there's a possibility that BTC's performance could improve once the CPI rates begin to rise.

5. Bitcoin Fear And Greed Index In Fear Zone For Over 70 Days

The Bitcoin Fear and Greed Index has been in the "Fear" zone for over 70 days now, and such an extended period of fear is usually followed by a market bottom. This could be a sign that the bear market is nearing its conclusion.