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Crypto Week: U.S. Inflation Rebound, u/MelloN98 550% Profit and Record Greed

Bitcoin (BTC) has experienced a 6.0% increase this week, reaching $51,000 per coin. This marks a record high since December 28, 2021. Despite briefly surpassing the $50,000 level earlier in the week, Bitcoin prices faced challenges in maintaining this threshold, particularly in the wake of an unexpected rebound in U.S. inflation.

The resurgence of inflation impacted markets significantly, leading to a sharp drop in bets on interest rate cuts by the Federal Reserve (Fed) in March and May, with figures falling to 6.5% and 37.8%, respectively. Concurrently, U.S. 10-year Treasuries yields surged to 4.32%, the highest level since December 1, 2023. The S&P 500 index futures also experienced a notable decline of 1.9%, marking the largest single-day drop in the last five months.

Bitcoin demonstrated resilience in the face of these challenges, experiencing a brief 3.0% decline to $48,312 before rebounding above $50,000. This recovery suggests strength in Bitcoin, although caution is advised before rushing into new long trades. Notably, investors have been lowering their stakes in Bitcoin. The ProShares Bitcoin Strategy ETF (BITO) reported capital outflows of $60.2 million last week. This is a fourth largest outflow in its history. The largest outflow was recorded in the previous week, when the fund lost $108.4 million. Spot Bitcoin-ETFs are doing much better. The infamous Grayscalle Bitcoin Trust ETF (GBTC) reported only $507.7 million outflows last week, while BlackRock iShares Bitcoin Trust (IBIT) reported an inflow of $250.7 million. However, these inflows are gradually declining. A week earlier IBIT reported inflows of $548.7 million.

The upcoming halving of Bitcoin in April seduces retail investors, but this might be a bullish trap ahead. Nevertheless, u/MelloN98 put a $14,000 bet on Polymarket for Bitcoin prices to rise to $50,000 by the end of February. And he won, receiving $77,400 or 550% of net profit. He made another $27,000 bet for Bitcoin prices to rally to a new all-time high by March 31. If he wins again he will get a $203,000 or 750% on top of his bet. We wish him luck. «Ave, Caesar, morituri te salutant!».

Not only this happy man believes in a sky-high rally this time. The upcoming Bitcoin halving in April has captured the attention of retail investors, but caution is warranted as this excitement could potentially lead to a bullish trap. Deribit crypto exchange data indicates increased investor activity in buying call options with strike prices ranging from $65,000 to $75,000 per coin, with expiration dates set between April and June.. These bets look more secure as on Polymarket, and there are much cheaper. But the expiry looks to close to hit the desired targets. The alter.me fear and greed index, currently at 79 out of 100, reflects extreme greed in the market, reminiscent of November 2021. However, historical trends suggest that such high levels of greed could lead to significant corrections, as seen in the 77% drop in Bitcoin prices following the last instance of extreme greed.