Bitcoin is seeing increased demands for a supply crunch as exchange reserves reach their lowest point in seven years, while attention on BTC price movements centers around the last remaining resistance.
Bitcoin (BTC) is kicking off the new week with strength, hovering around $67,000, and showing resilience despite recent fluctuations in traditional financial markets.
As it approaches key resistance levels at $69,000 and $73,800, the focus for market participants is whether it will break through these barriers in the days ahead. Factors such as signals from the Federal Reserve’s May meeting minutes and upcoming U.S. unemployment data could influence BTC’s trajectory.
Traders are increasingly optimistic about a bullish continuation after a period of consolidation, suggesting that a local bottom may have been established. Despite higher prices, sentiment remains subdued compared to the peak in March, hinting at a potentially more sustainable path towards price discovery. Against this backdrop, Cointelegraph delves deeper into the current dynamics driving Bitcoin markets this week.
Bullish momentum in Bitcoin persists, staying just shy of its record highs
Bitcoin has shown a strong resurgence this week, climbing back to nearly $67,000 during the Asia session after experiencing a brief dip at the weekly close. This temporary weakness coincided with geopolitical tensions surrounding Iran, but market sentiment quickly rebounded, with BTC/USD maintaining its 10% gains for May. According to CoinGlass, the most recent data indicates that the majority of immediate resistance levels are situated just below $68,000.
IT Tech, a contributor to the on-chain analytics platform CryptoQuant, has shared supplementary data revealing liquidation levels in proximity to the spot price.
Market participants reacted positively to the latest BTC price movement, with renowned trader Crypto Damus expressing optimism. “What a BTC weekly close! It’s the first Bullish engulfing weekly candle we’ve seen since October 2023,” Crypto Damus remarked. This statement referred to last week’s candle, which erased prior losses and closed at $66,210.
Michaël van de Poppe, the founder and CEO of trading firm MNTrading, reaffirmed his perspective on Bitcoin’s gradual ascent to new peaks.
“In all likelihood, Bitcoin will persist in traversing within this range. I anticipate minimal volatility in the near future,” he conveyed to X subscribers during the weekend.
Van de Poppe still anticipated that altcoins would “outperform” as this occurred, given that they had endured more pronounced losses during Bitcoin’s consolidation period.
Another post anticipated a gradual upward trend, steadily gaining momentum and potentially culminating in a vertical surge during Q3/Q4. However, as per a report by Cointelegraph, not all individuals hold this outlook. Over the weekend, trader and commentator Credible Crypto expressed the belief that BTC/USD could experience a drop to $60,000 or possibly even lower in the near future.
This week, the spotlight is on U.S. employment figures and Federal Reserve news in the macroeconomic sphere
In the upcoming days, the macroeconomic landscape won’t be primarily shaped by U.S. economic reports. Instead, the focus shifts to the Federal Reserve, with numerous senior officials scheduled for speaking engagements. Although Chair Jerome Powell won’t be among them, market observers closely analyze the remarks of governors and others for insights into future policy directions.
On May 22, the minutes from the Federal Open Market Committee’s May meeting, where interest rates were discussed, are set for release. Following this, U.S. jobless claims could stir further volatility in risk assets, continuing a trend observed in May and previous months. Simultaneously, attention is increasingly directed towards favorable liquidity conditions both domestically and internationally.
Financial commentator Tedtalksmacro recently indicated in his latest content that the crypto bull run is “far from over” due to these conditions. He highlighted the emergence of an early liquidity cycle, coupled with ample room for easing liquidity conditions indicated by the M2 money supply. Tedtalksmacro also noted that while liquidity has returned to crypto, as seen in Bitcoin ETFs, the pace of inflow has yet to reach the manic phase typically associated with cycle tops.
Bitcoin ETFs anticipate a “fresh confidence” in BTC
Tedtalksmacro hinted at a potential strong resurgence of U.S. spot Bitcoin exchange-traded funds (ETFs). After facing challenges following Bitcoin’s record highs in March, these ETF products are now experiencing a renewed surge in interest. Last week alone, inflows reached nearly $1 billion, marking the best weekly performance since March.
Tedtalksmacro suggested that this trend is likely to continue, especially as the price of Bitcoin continues to climb and traditional finance (tradFi) reaffirms its confidence in the asset.
The demand for ETFs is driven by a changing landscape in Bitcoin. With the block subsidy now halved from what it was in March, large inflows into ETFs mean that providers are acquiring significantly more BTC than what miners are adding to the daily supply.
Thomas Fahrer, CEO of the crypto reviews platform Apollo, recently disclosed that Bitcoin ETFs have purchased 21,700 BTC (equivalent to $1.5 billion) so far this month.
The U.S. spot ETFs alone now hold approximately 2.8% of the total BTC supply.
Bitcoin exchange reserves reach their lowest point in seven years
Exchange BTC reserves, a key indicator of Bitcoin demand, are currently at their lowest levels since 2017 according to recent data shared on social media. The data from CryptoQuant reveals that there are only 1,918,417 BTC available for purchase on major trading platforms as of May 19, a significant decrease from the levels seen a year ago, which were approximately 400,000 BTC higher.
“Timing couldn’t be better for a resurgence in ETF flows,” Fahrer observed, pointing out the interplay of a “demand shock” and “inelastic supply” as driving factors moving forward.
“In 2021, at the pinnacle of the bull market, around 2.7 million Bitcoins sat in exchange reserves, with Bitcoin trading at approximately $69,000. Fast forward three years, reserve levels have dropped to about 2 million Bitcoins, yet trading prices are approaching record highs,” noted a contributing analyst from CryptoQuant in a recent Quicktake market update.
Sustainable greed?
This recent uptick in BTC price isn’t immediately pushing the Crypto Fear and Greed Index to extreme levels, potentially signaling a positive outlook for short-term market sentiment. Currently at 70/100, the index assesses various factors to gauge the overall sustainability of crypto sentiment. Additionally, Bitcoin is gearing up for a ‘golden cross,’ a pattern that previously led to significant price gains of up to 170%.
Despite being described as “greedy,” the current sentiment surrounding Bitcoin lacks the extreme levels witnessed during its surge to all-time highs in March, which peaked at 90/100. However, according to research firm Santiment, Bitcoin is experiencing its most bullish sentiment since January. The recent unexpected rise above $66,000 on Wednesday (now surpassing $67,200) has contributed to this shift in sentiment. Santiment emphasizes the importance of keeping the fear of missing out (FOMO) among buyers in check for the positive trend to persist.
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