$70,000 mark in sight as bulls remain strong

• Bitcoin is poised for a third consecutive week of gains, breaking above the upper limit of the $64,700 range.
• U.S. spot Bitcoin ETFs saw inflows of $612.60 million through Thursday, indicating an increase in institutional demand.
• Investors should be cautious about activity in dormant wallets and addresses linked to Mt. Gox.

Bitcoin (BTC) is up about 3% so far this week, breaking above the upper limit of the $64,700 range. This gain was supported by increased institutional demand for ETFs, which saw inflows of more than $612 million this week. While some analysts suggest that the macroeconomic environment could support risk assets like Bitcoin, others point to an ongoing consolidation. Technically, the bulls seem to have the upper hand, eyeing the next critical resistance around $70,000.

Bitcoin is seeing an increase in institutional demand

Institutional flows have supported the price of Bitcoin this week. U.S. spot Bitcoin ETFs saw four consecutive days of inflows through Thursday, totaling $612.60 million, according to Coinglass data. Total Bitcoin reserves held by the 11 US spot ETFs rose from $50.53 billion to $51.15 billion, the highest level since late July.

Bitcoin Spot ETF net flow chart

Bitcoin ETF AUM chart

Global macro to support Bitcoin

This week’s QCP Capital report highlights a number of macroeconomic developments that could be more bullish for risk assets, including crypto.

According to the report, “The People’s Bank of China (PBoC) has introduced several policies aimed at kick-starting its booming housing market and anemic stock market. It appears to have worked (for now) as Chinese A50 futures closed 8% higher, with the Chinese and Hong Kong indices following suit.”

The report also highlights the widening yield spread between the 2-year and 10-year US Treasuries over the past month, which rose 40 bps and are now trading at 21 bps. A widening spread generally suggests optimism about economic growth, which supports risk assets over the medium to long term.

Additionally, on the US political front, Kamala Harris spoke positively about AI and digital assets at the fundraiser. Following her speech, rallies were seen in AI-related coins. The SEC approving options trading on IBIT (BlackRock’s Spot BTC ETF) also shows growing acceptance and demand for digital assets as an asset class.

Idle active wallet and Mt.Gox wallet activity raises concerns

The movements in the dormant wallets and also those related to the defunct cryptocurrency exchange Mt.Gox have raised some concerns among the crypto community.

Conformable DATA from arkham info wednesday Mt. Gox emptied four of its wallets after receiving $370,000 in BTC funds from the Kraken exchange. This move could be part of repayments to creditors that are coming soon. If these refunds go to lenders, fear, uncertainty and doubt (FUD) could arise among traders as these lenders are more likely to transfer their BTC to centralized exchanges to sell. Investors should be cautious about such activity. The Mt.Gox wallet currently holds 44,899 BTC worth $2.85 billion.

The data also shows that a 13-year-old whale wallet, which has been inactive since mid-2011, transferred 20 BTC worth $1.27 million to the Bitstamp exchange on Tuesday, marking its first move since the coins were originally received. During the same period, another whale wallet holding $77 million worth of BTC also moves five BTC to Kraken. This wallet still holds 1,215 BTC worth $77 million and has been mining since 2009, a month after Bitcoin launched. This whale woke up about three weeks ago and moved 10 Bitcoin 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.

Investors should be cautious about such activity. Movement of BTC by early inactive wallets could also create FUD, as wallets generally move BTC to centralized exchanges to sell their holdings.

Signal consolidation of metrics in the chain

Glassnode’s weekly report, published on Friday, explains how the current structure of the crypto market is very similar to 2019-2020, when the market saw an extended range of consolidation after strong growth in the second quarter of 2019.

The ratio measures the za-score of two gradients (155-day price gradient versus realized price). The chart below explains that negative values ​​can be interpreted as periods of relatively weak demand, leading to sustained price contraction.

155 Day Bitcoin Market and Delta Gradient Chart Made

The report further explains that the flow of capital into the Bitcoin network slowed after the market hit its March all-time high (ATH), which led to the loss of price momentum. The chart below compares the 155-day smoothed price gradient (black) to the realized price (orange).

The market gradient has declined in negative values ​​in recent weeks, while the realized price gradient is positive but trending lower. This indicates that the decline in the spot price was more aggressive than the intensity of capital outflows, suggesting Bitcoin price consolidation.

155 Day Bitcoin Market and Delta Gradient Chart Made

BTC on the way to $70,000

Bitcoin price broke and closed above the consolidation zone between $62,000 and $64,700 on Thursday, closing above $65,000. Since Friday, it has been trading slightly higher around $64,900, meeting resistance at the daily level of $65,379.

If BTC breaks and closes above its daily resistance at $65,379, it could rise 7% from the breakout point to retest the July 29 high of $70,079.

The Relative Strength Index (RSI) on the daily chart has dipped slightly, but remains near 65, well above the neutral level. For Bitcoin to continue its rise, the RSI must rise above the current trading level. However, traders should be cautious if it crosses the overbought level at 70.

BTC/USDT Daily Chart

On the other hand, if BTC breaks and closes below the consolidation zone around $62,000, it could extend the 7% decline to retest the September 17 low of $57,610.