Bitcoin surpassed $71,000 this week, breaking out of a narrow trading range it had been trapped in for several weeks. One of the main drivers of this price movement has been strong demand through ETFs, with net inflows of about $1.2 billion last week.
Looking ahead, several key factors suggest we may see a new wave of demand for Bitcoin.
A new wave of demand for Bitcoin
As noted in a recent analysis by CryptoQuant, these ETFs have seen net new inflows of approximately $1.2 billion in the past week alone, reflecting growing interest from buyers looking to gain exposure to the asset through these investment vehicles. This massive inflow into spot Bitcoin ETFs has significantly boosted the price of the leading cryptocurrency after a period of relative stagnation.
The recent rise in BTC prices has put short-term investors who recently purchased the asset in a position to profit once again. This new profitability reduces the risk of a collapse in investor sentiment or a reversal from a bullish trend to a bearish trend.
CryptoQuant believes a period of consolidation in the $60,000 to $70,000 range is more realistic in the short term. Currently, there are no major positive economic factors that could spur a large inflow of new capital and drive Bitcoin prices significantly higher, as has been the case in past bull cycles.
There have been few major economic data releases this week, which is favorable given the current optimistic mood following the latest US inflation numbers. However, if upcoming economic reports disappoint and weaken risk appetite, BTC price could retreat towards the $60,000 level.
While concerns remain about Bitcoin returning to consolidation, the report also highlights new signs that the next big rally could begin sooner than expected.
Speculation about the approval of the Spot Ether ETF has already revived the market, with an overall market capitalization of over $2.55 trillion.
Outlook: Despite my base case of consolidation, signs of a new wave of demand are emerging. It is becoming increasingly likely that the next bull market will begin sooner than expected.
The zone that determines the success or failure of Bitcoin
Popular crypto analyst Ali Martinez suggests that there is very much “minimum resistance” within the $70,180 to $70,600 price range. Over 450,000 Bitcoin addresses purchased approximately 273,000 BTC in this range, forming a supply zone.
If Bitcoin can break out of the $70,180 to $70,600 area, the path of least resistance will be to the upside. However, if selling pressure stalls the rally within this range, the rally may be temporarily suppressed.
