Could there be explosive price growth?
The current situation of Bitcoin (BTC) shows a clear demand shock, the price is stable around 71,000 dollars. From institutional investors, particularly through spot bitcoin exchange-traded funds (ETFs), this increase is exacerbated.
Spot Bitcoin ETFs have experienced unprecedented net returns. For the past 18 days, they have recorded a continuous positive flow, the longest such streak since inception.
Is Bitcoin Expecting Explosive Price Growth?
Among Bitcoin ETFs, BlackRock's iShares Bitcoin Trust (IBIT) is particularly noteworthy. It accumulated $350 million on Thursday, the highest in two trading months. In total, IBIT has acquired nearly $780 million worth of bitcoins over the past three trading days.
This week alone, Bitcoin ETFs collectively saw over $1.7 billion in inflows. Significantly, June 4 marked the biggest daily inflow of the week, with spot Bitcoin ETFs pulling in a collective $886 million.
“This is the highest weekly volume since inception (+$1.7 billion) – and we're still one day away,” said crypto analyst Miles Deutscher.
Additionally, the disparity between Bitcoin miners' output and ETF purchases shows the alarming trend in demand. Crypto investor Adam Temels says that on June 4, when Bitcoin miners produced 450 BTC, ETFs bought an astounding 12,508 BTC.
Read more: Who will own the most Bitcoins in 2024?
Despite these bullish movements, Bitcoin's funding rate remains neutral. This rate is critical to maintaining market balance and is the payment that traders exchange for perpetual futures contracts. It adjusts the contract price to the Bitcoin spot price.
Despite the high Bitcoin price, the neutral funding ratio suggests a balanced market sentiment with the possibility of a sudden downturn diminishing.
“Last time we were here (in March/April) – it was a sea of orange/red (high amount of money),” Deutscher added.
In addition, the open interest in the CME (Chicago Mercantile Exchange) group is increasing, approaching the high level again. Analyst Vettel Lunde from K33 Research reports that this increase is due to more direct participant exposure and entry into stronger leveraged ETFs.
Open interest, which represents the total price of contracts that have not yet been terminated, hit an 11-week high of more than 75,000 BTC. This measure indicates increasing market liquidity, and mirrors increased market sentiment and participation.
Moreover, according to CryptoQuant data, the supply of Bitcoin on the crypto exchange is at a one-year low.
“Just in time for the second wave of ETF flows. Demand shock + insurmountable supply,” said Bitcoin investor, Thomas Fahr.
Read more: Bitcoin (BTC) Price Prediction 2024/2025/2030
This traditional economic scenario of high demand coupled with low supply portends potentially explosive price growth for Bitcoin. Increasing institutional interest, balanced market mechanisms with neutral funding rates, and strengthening Bitcoin supply outline a promising outlook for the near-term valuation direction.
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