The flow of money into ETFs

Initially, spot exchange-traded funds for bitcoin caused huge expectations, and it was against this background that the value of the most capitalized cryptocurrency grew. After receiving approval from American regulators and their launch, the market experienced a month of correction. However, now we are seeing a new wave of activity: every day new funds are coming into the ETF.

For example, in the week starting February 26, the daily inflow of money into spot bitcoin ETFs exceeded $500 million. According to Bitmex Research, this figure was $520 million on Monday alone, and even more on Tuesday, $577 million.

The most successful is the iShares Bitcoin ETF (IBIT) exchange-traded fund of BlackRock. On February 27, it alone received $520 million, which set a record. The intraday trading volume of IBIT reached $1.3 billion, which is comparable to the trading of the largest American companies by capitalization.

The question may arise: how is it possible that the total inflow to spot ETFs is $576 million, and to IBIT – $520 million? Yes, IBIT does attract the largest amount of funds among all ETFs. It is also worth noting that investors continue to withdraw funds from the competing Grayscale fund: almost $126 million was withdrawn on February 27 alone.

These ETF activities spurred investors to buy BTC.

Elimination of short positions

One of the key reasons for bitcoin's growth is the increase in liquidations. If on February 25 the total amount of liquidations amounted to $ 13.78 million, then since January 26 this figure has consistently exceeded $ 100 million (so far on February 28 this has not happened, but the day has not yet been completed).

Interestingly, short liquidations prevail over long ones. On February 26, the volume of liquidation of short positions was eight times higher than long positions ($97.63 million versus $11.93 million). On February 27, this ratio was twice as high ($95.02 million versus $45.48 million). And on February 28, on a part-time basis, the difference was seven times ($74.9 million versus $10.23 million). This data was provided by the Coinglass portal.

What does this mean? It is possible that those who had previously been in short positions began to switch to long positions. Ultimately, the current dynamics of bitcoin fully match this explanation.

Extreme greed

The fear and greed index reached 82. This indicates that investors in bitcoin are experiencing extreme greed. The last time such a high figure was achieved was on October 20, 2021. Previously, it was even higher, in February 2021.

But, of course, the main interest of investors is focused on what will happen next and when bitcoin will exceed the historical maximum.

The historical maximum

In some countries, BTC has already reached historical highs against local currencies (not against the dollar, but against local currencies). If last week it was mainly African countries, now this trend has spread to Asia. Bitcoin has reached historic highs against the Chinese yuan and the South Korean won.

It seems that we can only wait for this to happen with the dollar. The only question is when.

Technical analysis

The historical maximum of $69,000 remains the only visible target – the resistance level for BTC. All the others have already been overcome. Judging by the dynamics of the last three days (from February 26 to 28, 2024), bitcoin could overcome the historical maximum this week.

Adam Back, CEO of blockchain technology development company Blockstream, expressed a bold opinion, assuming reaching the $100,000 level in the next 51 days before halving.

From the point of view of technical analysis, this is quite possible. All major indicators point to a bullish trend. The price is above the 50-week (marked in blue) and 200-week moving averages, which indicates a long-term bullish trend. In case of correction, the support level may be around $48,000.

Taking into account the previous dynamics, bitcoin is characterized by short periods of rapid growth. In recent years, the periods when bitcoin overcame historical highs have passed at the same rapid pace. This, among other things, explains the high volatility of this digital asset. Of the fundamental aspects, the upcoming halving adds optimism to the holders.

Conclusion

The main drivers of bitcoin's growth above the $60,000 mark were inflows of large funds into spot ETFs and a significant increase in the liquidation of short positions. In some countries, BTC has already reached historical highs against local currencies. Now investors are waiting for this to happen with the US dollar.