Several factors influence the dynamics of the bitcoin price, positioning it as a suitable investment asset. Capital inflows into the bitcoin ETF is now a critical determinant of the bitcoin price. On Monday, 26 August the price of bitcoin surged past $65,000 although it has since retraced. This development occurs at a time when many bitcoin investors are moving their holdings to cold storage due to the anticipation of an interest rate cut in the United States in September.
The bitcoin price fell by around 1.5% within the last 24 hours to trade at around $62,779.73 BTC/USDT at Gate.io crypto exchange. Generally, the asset’s price dip was in sync with the rest of the crypto market where major coins and tokens lost their value by small margins. Despite the small losses the entire market still looks bullish. There is good news for the number one cryptocurrency as the bitcoin ETF sector registered a notable inflow.
On 26 August BlackRock’s Bitcoin exchange-traded fund (ETF) recorded its highest inflow within the last 35 days. On that day IBIT had an inflow of $224.1 million. That was the largest inflow it had since 22 July when it registered $526.7 million. Based on the cryptocurrency market trend the investors capitalized on the bitcoin price dip.
As the image shows the bitcoin price fell during the weekend, giving some investors the opportunity to acquire more coins. The retracement came after its price surged from $58K to $65K on 25 August. On the other hand, the recent rise in capital inflow into bitcoin ETFs shows that institutional investors are willing to invest in the cryptocurrency even when there is high price volatility. It is important to note that on 26 August several bitcoin ETFs also recorded some decent inflows.
Previously, the ETFs also had large inflows during the week ending 23 August when the ETFs had a total inflow of $543 million. Once again IBIT had the largest inflow of $318 million. The recent increase in capital inflow was also influenced U.S. Fed’s decision to cut interest rates by 50 basis points at the September 2024 FOMC meeting.
Bitcoin Investors Transfer $5 Billion worth of Bitcoin in 30 Days
In the meantime CryptoQuant indicates that there has been an increase in the transfer of bitcoin to cold storage. This is because they anticipate its price to rise over time as a result of the possible interest rates cut in the United States. The following diagram shows the transfer of bitcoin for long term storage.
As the graph shows, there has been a decrease in exchange reserves. This indicates that the price of bitcoin may rise in the coming weeks. Exchange reserves are the amount of bitcoin held on cryptocurrency exchanges. As an example, on 5 July the exchange reserves stood at 759,823 BTC. However, it had decreased to 2,677,614 BTC by 25 August. This means that about 82,209 BTC, valued at around $5 billion, was moved to cold storage for safe keeping.
The decrease in exchange reserves is bullish since it reduces the possibility of an immediate rise in the asset’s selling pressure. Second, it shows that most investors have confidence that the bitcoin price may rise in the future. That shows an improvement in the crypto market sentiment.
Bitcoin Price Prediction
We have seen that in the past weeks the bitcoin price had been rising and falling by large margins but failed to break above $70,000. Currently, there is a need for confirmation that the bullish trend may continue. The bitcoin bullish continuation signal can only occur if its price breaks above $68,000. If that happens it would have closed above the bullish flag pattern in higher time frames. A break above this level will likely trigger a stronger rally than before.
However, since the bitcoin price is retracing downwards it will likely get the strongest support at the $61,000 level. Such a development can also help to build upward price momentum. The possibility of a continuation has been supported by Gart Van Lagen, a crypto analyst, who believes that bitcoin is forming a cup and handle formation.
If Lagen’s suggestion becomes accurate then bitcoin may make a strong breakout in coming weeks. In other words, if bitcoin and other major cryptocurrencies have strong consolidations they may break out soon. Such a scenario may, therefore, force most altcoins to rally. If such a situation coincides with other developments the bitcoin price may rise towards $100,000.
Several key indicators such as the Keltner Channel, the Average Daily Range and the Ichimoku cloud are showing that bitcoin is bullish. The Ichimoku on a weekly chart shows a green future cloud.
As observed on the diagram the cloud is green and gently rising. However, the flattening of the Ichimoku cloud at the end may show low volatility.
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