Bitcoin Experienced Traders Remained Unfazed By The Recent Sell-Off In BTC With Data Indicating Potential For New Price Highs

Bitcoin futures and options suggest increasing bullish momentum around the $70,000 mark for BTC.

Source: gazeteoksijen.com

During the week spanning from March 18 to March 22, newly introduced spot Bitcoin exchange-traded funds (ETFs) witnessed their inaugural period of net outflows. Investors withdrew a total of $888 million from these spot ETFs, a notable departure from the $2.57 billion inflow recorded in the preceding week. Such developments have spurred speculation regarding the durability of Bitcoin's surge to $70,000 on March 25th.

Bitcoin Has The Potential To Rally Even Without Inflows Into Spot BTC ETFs

Certain market participants asserted that institutional inflows played a pivotal role in propelling Bitcoin to its record peak of $73,755 on March 14, prompting skepticism regarding the 9% increase observed from March 23 to March 25. Adding to the apprehension is the observation that this rally coincided with the S&P 500 index failing to sustain its all-time high of 5,260 reached on March 21. On March 20, analyst venturefoundEr proposed that Bitcoin was undergoing a reality check subsequent to FOMO among ETF investors propelling it to a new high prior to the halving, effectively ensnaring those who purchased at the peak. Despite a 15% gain from March 20 to March 25, bearish concerns persist, yet Bitcoin's market behavior indicates that its bullish momentum isn't solely contingent on spot ETF inflows.

Certain traders contend that the recent approval of a $1.2 trillion spending package by the United States on March 23 serves as a significant positive catalyst for Bitcoin. This is particularly noteworthy given the U.S. Federal Reserve's forecast model predicting three interest rate cuts throughout 2024. With the U.S. deficit projected to hit $1.6 trillion in 2024, the pressure on government debt repayment intensifies as interest rates remain above 5.25%. The simultaneous ascent to record highs of scarce assets such as gold, Bitcoin, real estate, and the stock market implies a weakening U.S. dollar. Ultimately, the performance of the North American currency against the euro and the British pound holds less significance as investors seek refuge from fiat currency devaluation. Concluding that Bitcoin's price will sustain its upward trajectory due to monetary expansion might appear premature. However, bears arguing that the U.S. fiscal trajectory will precipitate a recession that could adversely impact risk-on assets—overlook a critical point: Bitcoin's price has already surged 64% year-to-date in 2024, leaving those anticipating a dip trailing behind.

Bitcoin Derivatives Remained Resilient During The Dip Below $62,000

To assess whether professional traders have grown more pessimistic about Bitcoin in light of the underwhelming spot ETF inflow data, it's prudent to analyze the BTC monthly futures contracts. In stable markets, these contracts typically maintain a premium of 5% to 10%, factoring in their extended settlement period. Data suggests that the annualized BTC futures premium remained largely unchanged despite the net outflows from spot ETFs. Presently, an 18% level is considered optimistic, indicating that buyers are willing to pay a premium to initiate leveraged long positions. Market data from Bitcoin derivatives imply robust price stability, even amidst recent outflows from spot ETFs, reinforcing the view that the $70,000 support level is becoming more solid.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.