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Bitcoin in Warm But Not Overheated Zone: What Could Happen Next?
Over the past seven days, bitcoin has recovered and reclaimed the range lows it hit earlier this month. Amidst this recovery, analysts at crypto exchange Bitfinex suggest that the leading cryptocurrency has returned to a warm, but not overheated zone.
It is crucial to note that macroeconomic events will dictate bitcoin’s next direction over the upcoming weeks as the market moves towards the end of this bull cycle.
This recovery in the United States spot exchange-traded fund (ETF) market is evident. At the beginning of this month, spot ETF inflows turned negative, with investors withdrawing at least 1,500 BTC across four consecutive trading days. Analysts discovered that the market witnessed its largest four-day selling stretch between July 31 and August 5, totaling $1.45 billion. However, the market saw a positive reversal between August 6 and 8, with inflows amounting to more than $770 million. Even on August 11, recorded positive flows exceeding $178 million.
The primary driver behind the current strength of the market is supported by consistent BTC accumulation by crypto treasury companies. Notably, BTC rallied close to its all-time high on Monday, climbing from $118,000 to $122,100. Although it had fallen back to the $118,000 range at press time, demand from ETFs and crypto treasury companies could potentially keep its value afloat.
Furthermore, Bitfinex has identified a growing relationship between ETF flows and macroeconomic conditions in recent months. Analysts say that the crypto market is becoming increasingly sensitive to macro events and this week would be no exception as Consumer Price Index (CPI) and Producer Price Index (PPI) data are due shortly.
Bitcoin’s current momentum depends largely on macro releases, with the asset either breaking to new highs or retesting recent lows. Bitcoin faces the possibility of retracing to $110,000 in the near term.
However, “the broader structural outlook remains constructive, underpinned by sustained institutional accumulation, expanding treasury adoption, and resilient spot demand,” analysts added.
In addition, market experts insist that BTC will continue oscillating between range highs and lows, with its price moving above and below the cost basis of fresh buyers.
Source: cryptopotato.com
