After parabolic growth in Q4 2024, Bitcoin price toppled from highs around $49,000 in January as investors sold the news on the approval of the spot exchange-traded funds (ETFs) in the US. The drop below $39,000 triggered mixed reactions among investors with some saying BTC could sweep liquidity at $36,000 before restarting the uptrend.
On the other hand, other people believed this was a chance to buy the final dip before BTC price ignited a massive pre-halving rally targeting levels above $50,000.
Bitcoin price is in the middle of an intense bear and bull tug-of-war resulting in consolidation between the narrow range low at $42,000 and range high at $44,000. The price also remains relatively unchanged over 24 hours, triggering concerns about how the stalemate will end.
Trading at $42,800 during US trading hours, and with a 20% increase in volume to $18 billion, a bullish outcome is highly likely. Although not green, the market cap is stable at $840 billion, underlining the 51.2% Bitcoin dominance.
BTC Spot ETF Net Inflow Volume Persistently Rising
The first spot exchange-traded funds (ETFs) started trading in the US a few days after operators received approval from the Securities and Exchange Commission on January 10.
Soon after their spectacular debut, the ETFs collectively posted net outflows accentuated by withdrawal from Grayscale’s spot GBTC ETF following its conversion from a Bitcoin Trust product.
Tables seem to be turning a few weeks later, with volume and net inflow soaring persistently. Citing data from SoSoValue, Chinese reporter Wu Blockchain reckons that “the total net inflow of Bitcoin spot ETF on February 5 was $68.11 million, which has been the seventh consecutive day of net inflow.”
According to SoSoValue, the total net inflow of Bitcoin spot ETF on February 5 was $68.11 million, which has been the seventh consecutive day of net inflow. Grayscale ETF GBTC had a single-day net outflow of $107 million. The other 9 ETFs except Grayscale had a total net inflow…
— Wu Blockchain (@WuBlockchain) February 6, 2024
Nine ETFs posted $175 million in net inflow volume on February 5, which collectively offset Grayscale ETF GBTC’s $107 million single-day net outflow. BlackRock stands out as one of the biggest contenders growing to surpass Grayscale, with $137 million of single-day net inflow.
The ETFs allow investors to invest in Bitcoin without physically owning cryptocurrencies. Institutional and other traditional investors find this enticing as they do not need to worry about navigating exchanges and storing the coins.
In this case, investors buy shares of an ETF product that tracks the price of Bitcoin. As demand increases, net inflow volume surges. Similarly, ETF operators buy more BTC to back the shares, hence the expected bullish impact on the price and crypto sector in the future.
Bitcoin Price Analysis: Can Bitcoin Price Ascend Above $80,000
To trade a new all-time high above $80,000 Bitcoin price will have to nearly double its current value. However, the weekly chart reveals consolidating prices within the grey and yellow bands.
The current market doldrums must pave the way for a price increase above the range high ($44,000) to affirm the long-term bullish thesis in BTC.
While Bitcoin cooled off the Q4 2024 rally at $49,000 following the ETF approval, it is too early to judge the impact of these new investment products on the price.
What’s apparent is the upcoming halving, which will impact supply and demand dynamics, and potentially trigger a parabolic run. Bitcoin halving occurs in four-year cycles, slashing miner rewards in half thus reducing supply over subsequent months.
Investors speculate about Bitcoin’s ability to rally extensively after halving but a price increase is not guaranteed considering other factors also impact the volatile crypto market.
Nonetheless, it is within investors’ rights to speculate, especially with Bitcoin price having ascended to almost $69,000 from approximately $8,000 after the halving in 2020.
A breakout to $50,000 cannot be ruled out despite ongoing rangebound oscillations. The Relative Strength Index (RSI) neutral at 68 shows resilience among bulls even as sellers work to push prices lower.
With a successful break above $44,000, FOMO could bolster Bitcoin price towards $50,000 considering the resistance at $46,000 and $48,000, respectively.
On the downside support at $42,000 and $40,000 is crucial for the resumption of the uptrend. If the lower level is lost, a larger decline could take BTC to $36,000. This remains to be an important level to watch for Bitcoin even as it consolidates.
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