Bitcoin (BTC) bears are taking a bruising on Monday as the price powers above $50,000, as BTC continues its momentum after posting its strongest weekly close since December 2021 on Sunday.
According to TradingView citing Bitstamp trading data, Bitcoin just traded above $50,000 for the first time since late 2021.
BTC was last trading up over 3% on the day after gaining 13.5% last week.
That was Bitcoin’s largest weekly percentage gain in last October.
Bitcoin bears have taken a beating over the past six months.
The BTC price has risen around 100% since last September’s lows in the $25,000 area.
Bitcoin Bears Blown Out of the Water
Many a Bitcoin bear will regret celebrating too soon in wake of Bitcoin’s dip back below $40,000 last month following a “sell-the-fact” reaction to the approval of spot Bitcoin ETFs in the US.
Many Bitcoin bears were at the time betting on an even deeper pullback to the low-$30,000s.
But these Bitcoin bears have been blown out of the water by a near-30% price recovery since the 23rd of January as new BTC price tailwinds come in.
Firstly, after experiencing major GBTC-driven outflows immediately after spot Bitcoin ETF approval, BTC is now benefiting from big net inflows.
As per CoinShares, spot Bitcoin ETFs saw $1.1 billion in net inflows last week.
AUM held by the newly launched nine spot Bitcoin ETFs (excluding Grayscale’s converted GBTC) exceeded $10 billion last week.
The launch of spot Bitcoin ETFs has undoubtedly been the strongest ETF launch in history.
And ETF inflows seem likely to remain a fairly price-insensitive tailwind to Bitcoin going forward.
As per CryptoQuant’s CEO and founder Ki Young Ju, BTC “could reach $112K this year driven by ETF inflows, worst-case $55K”.
— Ki Young Ju (@ki_young_ju) February 11, 2024
BTC Also Benefitting from These Tailwinds
ETF inflows aren’t the only major tailwinds for Bitcoin right now.
Bitcoin has also been benefiting from macro tailwinds as US equity markets push to fresh record levels.
The S&P 500 recently surpassed 5,000 for the first time, bolstered by strong recent earnings releases and US economic data.
Equities (and crypto) continue to benefit from the idea that the Fed will be cutting interest rates later this year.
US CPI data out tomorrow could further inform expectations surrounding the timing of these expected rate cuts.
Traders have also likely been bidding up the BTC price given the fast-approaching issuance rate halving.
While Bitcoin miners often need to sell BTC inventory around the time of the halving to make up for a 50% drop in revenues from BTC issuance, halvings have historically been bullish for the Bitcoin price, given the reduction of the rate at which new coins are introduced to the market.
Where Next for the BTC Price?
With Bitcoin having burst out to fresh highs for the year, some are worried about a pullback.
After all, Bitcoin’s 14-day relative strength index (RSI) has surged back into “overbought” territory above 70.
Moreover, Bitcoin’s rising “supply in profit” on-chain is approaching 95%, which could be a warning sign of a market top.
That’s according to a tweet by CryptoSlate analyst James Van Straten.
#Bitcoin is approaching 95% of all supply in profit, which usually marks tops.
We got to 93% when #Bitcoin was at 49,000.
— James Van Straten (@jvs_btc) February 12, 2024
While a pullback is possible, bulls will be eyeing a near-term test of resistance in the $52,000s.
Any pullbacks remain subject to being aggressively bought into, thanks to the above-mentioned bitcoin price tailwinds.
Bitcoin bears are likely to continue to suffer in the medium term.
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