Exploring the Role of Bitcoin ETFs in the Recent Price Rally
Bitcoin ETFs – After a period of relative stagnation since May, Bitcoin’s (BTC) demand is showing signs of a strong rebound, with apparent demand rising sharply to a monthly increase of 177,000 BTC last week. This surge in demand has played a pivotal role in driving Bitcoin’s price up by 5%. According to CoinDesk Indices data, BTC has risen 11% over the past week, outperforming the CoinDesk 20 (CD20) index, which only increased by 9.6% during the same timeframe.
Market Analysis and Price Movements
Analysts at CryptoQuant, led by Julio Moreno, noted that this marks the largest demand reading since late April, pushing Bitcoin to a ten-week high price level of over $67,800. Moreno emphasized that “an expansion of apparent demand is necessary for Bitcoin prices to rally sustainably to a new all-time high,” indicating that previous peaks of apparent demand were between 490,000-550,000 BTC. This suggests there is ample room for further price growth.
Historical Demand Trends
The accompanying chart illustrates how positive and increasing apparent demand has historically preceded Bitcoin price rallies, leading to new record highs during 2020-2021 and again in 2024. A significant factor contributing to this price increase has been the net buying activity from spot exchange-traded funds (ETFs) in the U.S., which recorded average inflows of nearly 9,000 BTC daily in Q1 2024, significantly supporting Bitcoin’s upward momentum.
Significant Inflows from U.S. Bitcoin ETFs
Recent data from SoSoValue indicates that U.S. BTC ETFs experienced another substantial day of inflows, totaling $458.5 million on Wednesday. Among the listed products, Blackrock’s IBIT led the charge with inflows of $393.4 million.
Whale Accumulation Signals Market Strength
Furthermore, large investors, often referred to as “whales,” are continuing to accumulate Bitcoin. The total balance of these influential holders, excluding exchanges and mining pools, has grown to 670,000 BTC annually. This increase is noteworthy, especially as the growth in holdings exceeds the 365-day moving average, a positive indicator for future price movements.
Increased Market Volatility on the Horizon
The BTC open interest (OI) for weighted perpetual futures also spiked to a multi-month high of over 0.0136% earlier this week, signaling that increased volatility may be on the horizon as new capital flows into the market.
Market Sentiment and Future Predictions
According to Polymarket bettors, there is a 64% chance that Bitcoin will reach $70,000 in October, marking a significant 45 percentage point increase in just one week. Additionally, they are projecting a 75% probability that BTC will achieve a new all-time high in 2024, up 23 percentage points during the same timeframe.
Dogecoin and Other Cryptocurrencies
In other cryptocurrency news, Dogecoin (DOGE) has remained in the green following a surge on Wednesday, spurred by news that Elon Musk donated $75 million to a Trump-aligned Political Action Committee and continues to promote the Department of Government Efficiency (DOGE) on social media platform X. During the Asia trading day on Wednesday, DOGE rose by 5.8%, while its Solana-themed competitor BONK increased by nearly 9%.
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