The price of the main cryptocurrency on Wednesday rose above $21,000 at the moment, but ended the day lower.
Bitcoin quotes, however, rose above the level of $20,381, which opens the way for them to the nearest resistance at $21,700, to which there is still a sufficient margin.
Bitcoin growth driver
The two-day rise of the main cryptocurrency began shortly after the dollar index (DXY) showed weakness and fell sharply.
For most of 2022, bitcoin and the dollar index were inversely related. While DXY was rising, fiat currencies around the world were depreciating.
However, this trend was also extremely negative for the price of the main cryptocurrency, as a strong US dollar meant a weak bitcoin. This inverse correlation worked on Tuesday.
Thus, a prolonged period of DXY weakness could mean further momentum for bitcoin, which has a short-term bullish bias.
In this regard, today is an important day for the main cryptocurrency, as the results of the European Central Bank meeting will be announced, at which it is expected to raise the rate by 75 basis points. US GDP data will also be published.
And what about the ECB and GDP?
The US dollar is currently close to a one-month low against a basket of currencies in which the euro has a weight of 57.6%. The cut came as speculation intensified that the US Federal Reserve would move towards less aggressive rate hikes to reduce recession risks.
However, factors that favor the US dollar remain relevant: the difference in rates and the fact that the Fed still has a lot of work to do. However, in the short term, expectations are different.
Today's GDP numbers may encourage the Fed to stick to its current policy and not put on the brakes for now.
Therefore, whether the price of bitcoin can continue its growth will also depend on the release of US GDP data. The Fed will keep a close eye on these numbers.
Analysts predict that the US economy will grow by 2.4% in the third quarter. This could signal to the Fed that the interest rate hike is not having too much of a negative impact on the economy at this time.
As for the ECB, what the central bank says today will be important. The question is whether they want to demonstrate their full commitment to the inflation mandate, or show weakness or concern about what looks like a challenging growth outlook.
Ahead of Thursday's announcements, BTCUSD is in a wait-and-see mode, pulling back from recent highs.
Cryptocurrencies move BTC but do not increase supply
The Whale Alert platform reported that a single bitcoin whale moved more than $123 million worth of cryptocurrencies in a single transaction.
According to Whale Alert, on Tuesday, an unknown wallet sent 5,444 BTC worth over $105 million to a second unknown wallet, as well as 969.77 BTC worth over $18.7 million to a third unknown wallet.
Other major bitcoin transactions this week include FTX, which sent 1,082 BTC worth more than $21.8 million to an unknown wallet on Tuesday.
Later that day, FTX sent 1,108 BTC worth over $22 million to another unknown wallet.
Another exchange, Coinbase, sent 1,096 bitcoins worth more than $22 million to an unknown wallet on the same day.
It is worth recalling that the analytics firm Santiment noted last week that the bitcoin exchange supply hit a four-year low of 8.48%, which reduces the likelihood of a future sell-off.
Santiment also reported last week that small to medium sized bitcoin addresses (containing between 0.1 and 10 BTC) have accumulated 15.9% of the coin's available supply, an all-time high.
Nevertheless, it is still difficult to draw conclusions that the growth of the market and the main cryptocurrency will continue. Apart from the current resistance at 21,700 BTCUSD, we need to consolidate above $25,000 per coin before we can talk about a transition to a bull market.
