Investors and experts alike have taken notice of the remarkable achievement of Bitcoin's price breaking beyond the $47,000 threshold. This remarkable shift has captured the attention of both groups. This substantial price movement may be linked to three primary causes: the rush of investments into spot Bitcoin exchange-traded funds (ETFs), considerable actions in the futures market, and a technical breakout from a period of compression. All three of these factors have contributed to the remarkable price movement. In this section, we will examine each of these contributing aspects in further detail.
1 Bitcoin Exchange-Traded Funds Experience Record Inflows
Despite the fact that more than $101.6 million was taken out of the Grayscale Bitcoin Trust (GBTC), the market saw a stunning flood of $403 million into spot Bitcoin exchange-traded funds (ETFs) on February 8. This was the third-largest single-day net inflow. Since the introduction of these exchange-traded funds (ETFs) on January 11, the total inflow has topped $2.1 billion, which is equivalent to more than 200,000 Bitcoins. This action demonstrates that investors are showing a growing hunger for Bitcoin.
Through the use of X, Eric Balchunas, a well-known specialist on exchange-traded funds (ETFs) at Bloomberg, provided insights into the unprecedented performance of these financial instruments. After just one month on the market, he made the following statement: "With over $3 billion in assets, both [BlackRock's] IBIT and [Fidelity's] FBTC stand out among the Top 25 exchange-traded funds (ETFs) by assets."
The competitive dynamics that are now in play were further commented upon by Balchunas, who said that "the real unseen force here is competition." The simultaneous introduction of ten exchange-traded funds (ETFs) on the same day, which included some of the most prominent issuers, really sparked a rush for inflows, demonstrating an aggressive quest of market dominance.
2 The dynamics of the futures market and short liquidation
According to statistics provided by Glassnode, the Bitcoin futures market has seen a significant short liquidation event, with the total amount of liquidations hitting $52.09 million in the previous twenty-four hours. The greatest single liquidation order on Bitmex (XBTUSD), which was valued at $5.11 million, had a significant role in highlighting this event.
Skew, a cryptocurrency expert, discussed the issue and made the following observation: "I would say that the majority or a decent portion of the revenge shorts that were fading the grind higher were squeezed out above $45K into the current price area." It is much more noteworthy that spot flows are occurring here, particularly when longs have begun to pursue price. Take note of the fact that declining perp discounts are more likely to be applied to possible premiums in the future; if another squeeze higher comes with high perp premiums and spot selling, it would most likely be the local high of this rally.
According to Vetle Lunde, a Senior Analyst at K33 Research, the CME basis has recovered to levels that were witnessed before the entry of ETFs, and there has been a significant rise in open interest. The base of CME has restored to the levels it was at before the ETF. Over the course of the previous three days, open interest has increased by 15.6 thousand BTC, which is equivalent to a sixteen percent increase. Active market players, who are not exchange-traded funds, are the source of almost all growth. It was observed by Lunde that the OI within this group has returned to the levels it was at before the ETF.
3 A Breakout in Technical Analysis, as Indicated by the BBW
A breakout from a period of compression was discovered by the Bollinger Band Width (BBW) indicator, which gave a vital signal for the current price action. This indicator indicated a breakout from the compression phase. A time of low volatility and an imminent'squeeze' is indicated by the fact that the BBW plummeted to a position as low as 0.11.
As reported by NewsBTC, Bitcoin saw significant price swings immediately after the Bollinger Band Width (BBW) dropped to levels that were comparable to those that occurred in the past. Events from the past provide a glimpse of possible tendencies that may emerge in the future.
On October 13 of the previous year, when the BBW hit a similar low, Bitcoin promptly began on a major rebound, attaining a more than thirty percent rise in only ten days. This remarkable surge continued until the present day. On the other hand, the value of Bitcoin dropped by fifteen percent during the course of a just eight days and occurred in the middle of August 2023. In addition, Bitcoin had a remarkable increase in the beginning of January 2023, with its value rapidly increasing by forty percent in only seventeen days.
When these past trends are taken into consideration, the Bitcoin Boltzmann Wave (BBW) has once again shown its significance as an indicator for forecasting the next significant price movement of Bitcoin.
