- Bitcoin is experiencing a strong upward trend, breaking above $64,700, driven by significant institutional demand for spot ETFs, which saw inflows of $612.60 million this week.
- However, activity in dormant wallets and Mt. Gox addresses raises concerns among investors, while Bitcoin’s price could potentially reach $70,000 if it surpasses the current resistance at $65,379.
Bitcoin is poised for a third consecutive week of gains, breaking above its range upper limit of $64,700. This gain was supported by increased institutional demand for ETFs, which recorded inflows of more than $612 million this week. While some analysts suggest that the macroeconomic backdrop could bolster risk assets like Bitcoin, others point to an ongoing consolidation. From a technical point of view, bulls seem to be having the upper hand, looking at the next critical resistance around $70,000.
Bitcoin Sees Rise in Institutional Demand
Institutional flows supported Bitcoin’s price this week. According to Coinglass data, US spot Bitcoin ETFs experienced four straight days of inflows until Thursday totaling $612.60 million. The total Bitcoin reserves held by the 11 US spot Bitcoin ETFs rose from $50.53 billion to $51.15 billion, the highest level since the end of July.
QCP Capital’s report this week highlights a series of macroeconomic developments that could be more bullish for risk assets, including crypto. According to the report, “The People’s Bank of China (PBoC) introduced several policies aimed at kickstarting their sputtering housing market and anemic equity market. It has apparently worked (for now) as Chinese A50 futures closed 8% higher, with Chinese and Hong Kong indices following suit.”
The report also highlights the widened yield spread between the 2-year and 10-year US Treasury notes over the past month, which moved 40bps higher and is now trading at 21bps. A widening spread generally suggests optimism about economic growth, which supports risk assets in the medium to long term. Additionally, on the US political front, Kamala Harris spoke positively about AI and digital assets at her fundraiser. Following her speech, rallies in AI-related coins were observed. The SEC approving options trading on IBIT (BlackRock’s Spot BTC ETF) also shows the growing acceptance and demand for digital assets as an asset class.
Active Dormant Wallet and Mt.Gox Wallet Activity Raise Concerns
Moves in dormant wallets and also in those related to the defunct crypto exchange Mt.Gox have raised some concerns among the crypto community. According to data from Arkham’s intelligence, on Wednesday, Mt. Gox emptied four of their wallets after receiving $370,000 in BTC funds from the Kraken exchange. This move could be part of the repayments to the creditors coming soon. If these repayments proceed to the creditors, fear, uncertainty, and doubt (FUD) could spark among the traders, as these creditors are more likely to transfer their BTC into centralized exchanges to sell. Investors must be cautious about such activity. Mt.Gox wallet currently holds 44,899 BTC worth $2.85 billion.
The data also shows that a 13-year-old whale wallet, which had remained inactive since mid-2011, transferred 20 BTC valued at $1.27 million to the Bitstamp exchange on Tuesday, marking its first movement since the coins were initially received. During the same period, another whale wallet holding $77 million worth of BTC also moved five BTC to Kraken. This wallet still holds 1,215 BTC worth $77 million and has been mining since 2009, one month after the Bitcoin launch. This whale woke up around three weeks ago and has moved 10 Bitcoins to Kraken in three separate transactions. The third early Bitcoin whale, which mined Bitcoin around the same time, was active last week after 15 years of dormancy to move $16 million worth of BTC.
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BTC on the Road to $70,000
Bitcoin price broke and closed above its consolidation zone between $62,000 and $64,700 on Thursday, closing above $65,000. As of Friday, it is trading slightly higher, around $64,900, encountering resistance at the daily level of $65,379. If BTC breaks and closes above its daily resistance level at $65,379, it could rally 7% from the breakout point to retest its July 29 high of $70,079.
The Relative Strength Index (RSI) on the daily chart has declined slightly but remains close to 65, well above the neutral level. For Bitcoin to continue its rally, the RSI must rise above its current trading level. However, traders should be cautious if it exceeds the overbought level at 70. On the other hand, if BTC breaks and closes below the consolidation zone around $62,000, it could extend the decline by 7% to retest its September 17 low of $57,610.
