Last week, Bitcoin recorded five consecutive positive price closures, and mining profitability has resumed.
This suggests a strong bullish momentum despite the high levels of uncertainty prevailing in the markets due to President Joe Biden’s withdrawal from the elections. The largest digital token has surged 29% since July 5, bouncing above $68,000 as the selling pressure from German authorities and miners has decreased and ETF inflows have turned positive, helping to lift the price of Bitcoin.
This impressive recovery was highlighted in the weekly Bitfinex Alpha Market Report, which offers a detailed overview of current and future developments in the Bitcoin market. Here are some highlights:
Summary
Profitability of mining, ETF inflows, price increase: the week of Bitcoin (BTC)
One of the key factors that has contributed to the recent increase in Bitcoin price is the imminent end of the post-halving selling phase by miners. This phase marks their return to profitability for the first time in a month.
With the end of this phase, miners are no longer forced to sell large quantities of Bitcoin to cover their operating costs, thus reducing the selling pressure on the market.
Investor confidence has seen a significant recovery, as evidenced by the inflows of $1.2 billion into ETFs last week. ETFs, or exchange-traded funds, offer investors a convenient way to gain exposure to Bitcoin without having to directly purchase and manage the token.
The increase in ETF inflows indicates that investors are returning to Bitcoin, given its recent gains and the potential for further price increases.
Another signal of market strength is the decline in Bitcoin reserves on exchanges. This decline indicates that large investors are accumulating the asset, withdrawing their funds from exchanges to store them long-term rather than selling them.
This behavior suggests an accumulation and a potential supply squeeze, which could push prices even higher in the coming months.
Future prospects of Bitcoin
According to the analysts at Bitfinex, the metric of Bitcoin exchange reserves, which tracks the amount of BTC held in exchange wallets, provides valuable insights. A drop in exchange reserves typically indicates that investors are withdrawing their holdings for long-term storage rather than for sale.
The last few weeks have seen a rapid decrease in these reserves, suggesting that large investors are buying at the dip and moving their assets out of the exchanges. This behavior points to accumulation and suggests a potential supply squeeze, which could drive prices up in the coming months.
Looking ahead, we expect a week full of volatility and driven by news, with the elections, the launch of the Ethereum ETF and the creditors of Mt. Gox receiving coins among the main topics of discussion. The uncertainty brought by the absence of a clear Democratic Party candidate adds further elements of uncertainty to the markets.
In conclusion, Bitcoin has once again demonstrated its resilience and ability to recover in a volatile market. The combination of lower selling pressures from miners, positive inflows into ETFs, and accumulation signals from large investors suggests a strong growth potential for the future.
Investors should remain vigilant and closely follow market developments, as Bitcoin continues to be a dominant force in the cryptocurrency landscape.
