Bitcoin (BTC) climbed past the $71,500 mark during European trading hours on Tuesday, marking a significant surge driven by a confluence of factors, including record-breaking ETF inflows and heightened activity in the derivatives market. This price rally, representing a 4.1% increase over the past 24 hours, reflects growing institutional interest and a bullish sentiment surrounding the leading cryptocurrency.
The surge can be attributed, in large part, to substantial inflows into Bitcoin spot ETFs. On October 28, these ETFs saw a collective influx of $479 million, with BlackRock’s IBIT leading the charge with a $315.1 million addition, according to data from SoSo Value. Other notable inflows included the Fidelity Wise Origin Bitcoin Fund (FBTC) with $44.1 million and the ARK 21Shares Bitcoin ETF (ARKB) with $59.7 million.
While Bitcoin ETFs saw substantial inflows, Ethereum (ETH) spot ETFs experienced a net outflow of $1.1376 million on the same day. This contrasting trend highlights the growing preference for Bitcoin among institutional investors, a sentiment echoed by the persistent net inflows into Bitcoin ETFs over the past 12 trading days.
Experts believe that these inflows, coupled with expectations of interest rate cuts, are positioning Bitcoin for further gains. Ryan Lee, Chief Analyst at Bitget Research, pointed to the role of liquidity driven by ETF inflows and the potential for a Federal Reserve rate cut at its upcoming meeting. “A rate cut would improve overall macroeconomic liquidity, likely boosting crypto assets like Bitcoin,” Lee noted.
Adding to the bullish outlook, the derivatives market is also signaling potential volatility. Blockonomi data reveals that Bitcoin’s open interest in derivatives recently reached $37.6 billion, approaching its all-time high. This heightened open interest, according to Darren Franceschini, co-founder of Fideum Group, indicates that traders are positioning themselves ahead of anticipated market shifts.
However, Franceschini cautioned that market dynamics can change rapidly, especially with the upcoming U.S. presidential election adding uncertainty regarding potential policy changes impacting crypto.
The surge in BTC price and activity is also accompanied by broader liquidation trends, with $222.8 million in liquidations recorded in the past 24 hours, according to CoinGlass data. Short positions accounted for $164.6 million, indicating strong buying pressure that forced bearish traders out of the market. These liquidations, along with bullish ETF inflows, reinforce Bitcoin’s current upward momentum.
While the outlook appears optimistic, some indicators suggest a potential consolidation phase. Illia Otychenko, Lead Analyst at CEX.IO, highlighted technical signals indicating that Bitcoin might be approaching a consolidation phase, with momentum indicators nearing overbought levels. “Bitcoin’s correlation with traditional markets remains high, particularly with tech giants reporting earnings this week,” Otychenko noted, adding that while the RSI and MACD are favorable, they hint at possible consolidation before further advances.
Eneko Knörr, cofounder of Stabolut, believes that Bitcoin is poised for a significant breakout as November approaches. He sees Bitcoin “out the other side” of the halving, which occurred in April. Historically, bull markets have started 150-170 days after the halving. This timing aligns with Bitcoin’s supply on exchanges plummeting to record lows of less than 2 million BTC available, creating potential for a “short squeeze.” Bitcoin, on a technical perspective, has recently consolidated above the $67,000 level, which Knörr considers an excellent support or launchpad point for any upcoming breakout.
As more traditional finance companies integrate Bitcoin into their offerings, the evolving role of crypto assets in institutional portfolios will be further explored at Benzinga’s Future of Digital Assets event on November 19.
