Despite all the negative macro and industry developments that took place in the past week, bitcoin’s price went on an impressive run on Monday morning, surging to a new eight-month high of just over $87,000.
Here are some of the possible reasons behind this, but let’s start with why it was unexpected.
The Bad News
It was just a week ago that the US Senate was set to vote on advancing the key crypto market structure bill, the CLARITY Act. Without much fight, the Republicans lost the vote, and the legislation faced another major setback, although many experts believe this is not the end of it.
A day later, the situation for risk-on assets like $BTC worsened when the US Federal Reserve hiked interest rates for the first time in over three years. Bitcoin’s price reacted with immediate declines, slipping to a three-week low of $75,000 on a couple of occasions.
However, the bulls showed resilience the following days and initiated a more impressive leg up on Friday. Although the Bank of Japan followed the Fed’s example, $BTC rallied to just over $80,000. It climbed to $82,000 on Saturday, but another set of negative macro developments — escalating tension in the Middle East as well as more violent attacks exchanged by Ukraine and Russia — led to a brief correction to $80,300.
Monday, though, was a big day for the crypto markets. Despite all of the above, $BTC skyrocketed by over seven grand from bottom to top and peaked at $87,400 (on Bitstamp), which became its highest price tag since late January.
How Come, $BTC?
The most obvious reason behind the cryptocurrency’s spectacular ascent came from the ETF inflows. Data from SoSoValue shows that $998.95 million entered the funds on Monday alone, making it the single-best performance in nearly a year.
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CryptoQuant’s analysis sheds further light on the situation. The analysts claimed that there’s more to the story, especially on the technical side. Spot demand worked in tandem with the ETF inflows, resulting in well over $340 million in shorts getting wrecked in a classic short squeeze.
They added that there wasn’t much resistance on the way up, as the URPD showed little historical activity between $80,000 and $85,000, which allowed $BTC to “move through quickly.” Now, though, the asset has reached major resistance at $85,000 and $95,000.
“$BTC needs ETF flows to follow through to push through this area. But the Coinbase Premium Gap has turned negative, suggesting U.S. spot demand has cooled. All eyes are on the U.S. session to see whether ETFs can deliver another strong day,” CQ predicted.
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