After enduring a significant 20% price correction earlier this month that saw Bitcoin fall below $56,400 and increased outflows from the Bitcoin ETF market, the world’s largest cryptocurrency has managed to stage a strong comeback. It has broken above the key $66,000 resistance level and turned it into a new support zone.
The resurgence in Bitcoin’s price has been closely tied to a rekindling of inflows into the US spot Bitcoin ETF market. Data from Farside shows that spot Bitcoin ETFs saw their best inflow week in two months, with the US fund category collectively notching $948 million in positive net flows from May 13 to May 17.
Interestingly, the majority of these inflows, approximately 89%, occurred in the last three trading days of the week, which industry analysts and researchers such as James Butterfill of CoinShares attribute to a shift in investor sentiment following the release of a lower-than-expected Consumer Price Index (CPI) report on Wednesday. Butterfill stated:
The inflows were an immediate response to the lower-than-expected CPI report, highlighting our view that Bitcoin prices have recoupled to interest rate expectations.
Notably, the Grayscale Bitcoin Trust, which has seen outflows of $16.6 billion since the launch of the first Bitcoin ETF in January, saw small inflows totaling $18 million.
Beyond just spot Bitcoin ETFs, the digital asset investment product space experienced inflows for the second consecutive week, totaling $932 million, according to CoinShares. However, trading volumes remained relatively low at $10.5 billion, compared to the $40 billion seen in March.
The renewed institutional interest in Bitcoin ETFs and the broader digital asset space has coincided with a strong price recovery for the leading cryptocurrency. Bitcoin’s ability to firmly hold the $66,250 support level, with over 530,000 BTC traded at this price, has given analysts confidence in the asset’s potential for further gains.
According to crypto analyst Ali Martinez, if the $66,000 support holds, Bitcoin could see strong potential for further gains in the coming days, demonstrating the bullish sentiment surrounding the largest cryptocurrency on the market.
However, while Bitcoin has managed to bounce back above the crucial $66,000 level after the recent pullback, the leading cryptocurrency still faces a critical test as it attempts to break out of its established trading range.
Crypto analyst Rekt Capital has pointed out that despite Bitcoin recording a bull flag breakout confirmation, the asset still needs to secure a daily close above $67,000 to continue its trend of higher highs and confirm the potential for further upside.
The analyst further explains that Bitcoin has been oscillating between its low and high range between $60,000 and $70,000 for over two months, a natural consolidation process. As part of this, Rekt Capital believes that Bitcoin should be able to revisit the range high of $71,500 over time.
At the time of writing, BTC is trading at $68,130, up a substantial 9% in the last week alone and over 8% in the last fourteen days.
Featured image from Shutterstock, chart from TradingView.com
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