Bitcoin is seeing signs of a new wave of demand after surpassing a major hurdle this week.
Bitcoin has climbed above $71,000 this week, breaking out of the tight trading range it had been confined to for several weeks. One of the main catalysts for this price action is the strong demand through ETFs, with net inflows of approximately $1.2 billion over the last week.
Going forward, several key factors suggest a new wave of demand could be building for Bitcoin.
New Wave of Demand for Bitcoin
As noted by CryptoQuant’s latest analysis, over the past week alone, these ETFs have seen around $1.2 billion in net new inflows, reflecting increased buyer interest in gaining exposure to the asset through these investment vehicles. This huge capital flows into spot Bitcoin ETFs have provided a significant boost to the leading cryptocurrency’s price after a period of relative stagnation.
The recent rise in BTC’s price has allowed short-term investors who recently purchased the asset to be in a profitable position again. Such renewed profitability reduces the risk of a break in investor sentiment and a reversal from a bullish to a bearish trend.
CryptoQuant still views a period of consolidation in the $60,000 to $70,000 range as more plausible in the near term. There are no major positive economic factors at play currently that would drive a huge influx of new capital and push Bitcoin into major price rallies like in past bull cycles.
This week is light on major economic data releases, which is favorable given the current optimistic mood following the latest US inflation numbers. However, if upcoming economic reports disappoint and dampen risk appetite, that could trigger a BTC price pullback back down toward the $60,000 level.
While concerns persist about Bitcoin returning to consolidation, the report also highlights emerging signs that the next major rally could begin sooner than anticipated.
The market is already seeing a resurgence owing to the speculation regarding the approval of spot Ether ETF which has pushed the collective market cap above $2.55 trillion.
“Outlook: Despite my base scenario of consolidation, signs of a new wave of demand are emerging. There is a growing possibility that the next rally could begin sooner than expected.”
Make-or-Break Zone for Bitcoin
Popular cryptocurrency analyst Ali Martinez suggests very “minimal resistance” within the $70,180 to $70,600 price range. Over 450,000 Bitcoin addresses bought around 273,000 BTC in this range, creating a supply zone.
If Bitcoin manages to power through the $70,180 to $70,600 area, the path of least resistance points higher. But if selling pressure stalls the rally in this range, it could cap the upside temporarily.
Source: cryptopotato.com
