Bitcoin (BTC) started the new week with gains of $67,000 on TradFi Markets.
The largest cryptocurrency is nearing a rematch with final resistance against its past and present all-time highs of $69,000 and $73,800.
Whether it will reach it in the coming days is a key concern facing market participants, and a variety of factors could contribute to the continuation of the bull run.
This includes clues on US economic policy as the Federal Reserve releases minutes from its May meeting, and US unemployment data is also awaited.
When it comes to BTC price action, traders are increasingly convinced that a local bottom has come and that the uptrend will result after two months of consolidation.
Meanwhile, you may notice a refreshing difference. Prices are higher, but sentiment remains below the March high.
Is a more sustainable journey to price discovery possible?
Against this backdrop, Cointelegraph takes a closer look at the issues surrounding the Bitcoin market this week.
Bitcoin strength continues to maintain pressure below all-time highs.
Bitcoin is certainly coming back to life this week, bouncing back to around $67,000 in the Asian session after a brief dip in the weekly close, according to data from Cointelegraph Markets Pro and TradingView.
That brief weakness was accompanied by geopolitical uncertainty in Iran, but this was soon forgotten by the market as BTC/USD maintained its 10% gain in May.
Latest data from monitoring resource CoinGlass shows that most of the immediate indirect resistance lies just below $68,000.
Additional data shared with X (formerly Twitter) by IT Tech, a contributor to on-chain analytics platform CryptoQuant, shows clearing levels surrounding spot prices.
Commenting on the recent BTC price action, market participants were in a positive mood.
“The beauty of BTC’s weekly close. “For the first time since October 2023, the bull market has been sold out.” Popular trader Crypto Damus commented:
Crypto Damus noted that last week’s candle erased previous losses to close at $66,210.
Michaël van de Poppe, founder and CEO of trading firm MNTrading, reiterated his thoughts on Bitcoin’s steady progress towards new highs.
“Bitcoin will likely continue to move in this range. I don’t expect a ton of volatility to come,” he told X subscribers over the weekend.
“I would rather expect consolidation and a slow upward move towards all-time highs.”
Nonetheless, Van de Poppe added that he expects altcoins to perform “outperform” while this happens, which has suffered even more severely during Bitcoin’s consolidation phase.
“We will see a slow upward trend in the third/fourth quarter before slowly but surely accelerating vertically,” the additional post predicted.
However, not everyone shares this view, as Cointelegraph reports. Over the weekend, trader and commentator Credible Crypto expressed his belief that the next trade for BTC/USD will be below $60,000.
US Employment Data, Fed Headlines Macro Week
Unlike last week, the macro picture is not affected by the upcoming US economic report.
Instead, the Fed takes center stage in the form of a number of speeches by senior officials.
Chairman Jerome Powell is not expected to be in the position, but markets are nonetheless watching the language used by the governor and others for clues about future policy.
The minutes of the Federal Open Market Committee’s May meeting, where interest rates were discussed, are scheduled to be released on May 22.
Subsequent US unemployment claims could continue the trend seen this month and previously, providing another round of volatility for risk assets.
At the same time, there is increasing focus on favorable liquidity conditions both in the United States and elsewhere.
In his latest
Tedtalksmacro indicated that an early liquidity cycle is beginning, with M2 money supply indicating “ample upside for easing liquidity conditions.”
“Liquidity has definitely returned in crypto (BTC ETF), but the pace of inflows has yet to see the manic phase that coincides with the peak of the cycle,” he continued about cryptocurrency market trends.
Bitcoin ETF takes the lead in ‘new belief’ in BTC
Tedtalksmacro mentioned a situation where a strong rebound could occur in US spot Bitcoin exchange-traded funds (ETFs).
After struggling for a few weeks following Bitcoin’s all-time high in March, spot ETF products are seeing a resurgence of interest. Last week, inflows reached nearly $1 billion, its best weekly performance since then.
“We expect this to increase as prices rise and tradFis once again regain confidence in the asset,” Tedtalksmacro concluded.
ETF demand is in a new environment. Bitcoin’s block subsidy is half what it was in March, and the massive inflows are causing ETF providers to purchase far more BTC than miners are adding to the supply each day.
“Bitcoin ETFs have purchased 21,700 BTC ($1.5 billion) so far this month,” Thomas Fahrer, CEO of cryptocurrency review portal Apollo, said last week.
“This is three times the number of new Bitcoins supplied by miners.”
Currently, US spot ETFs alone hold approximately 2.8% of the total BTC supply.
Bitcoin exchange holdings plummet to lowest level in 7 years
When it comes to demand for Bitcoin, few statistics tell a more optimistic story than exchanging BTC holdings.
The amount of Bitcoin available for purchase on major trading platforms is at its lowest level since 2017, according to new data currently circulating on social media.
This comes courtesy of CryptoQuant, which tallied 1,918,417 BTC as of May 19th. A year ago, this was about 400,000 BTC higher.
“The timing is perfect for a second wave of ETF flows,” Fahrer said of the phenomenon, noting that there will be a combination of “demand shocks” and “inelastic supply” going forward.
“At the peak of the 2021 bull market, approximately 2.7 million Bitcoins were held in exchange reserves and Bitcoin was trading at approximately $69,000. Three years later, holdings have decreased to around 2 million bitcoins, but trading prices are approaching historic highs,” a CryptoQuant contributing analyst wrote in one of last week’s Quicktake market updates.
“The recent halving event effectively halved the potential new supply from miners, greatly reducing the likelihood of new Bitcoin entering the market through sales. Given these dynamics, it becomes difficult to maintain a bearish stance on Bitcoin.”
Sustainable greed?
The Crypto Fear and Greed Index, which could be an encouraging sign for near-term market sentiment, is currently in no extreme rush for BTC price to rise.
Related: Bitcoin prepares for ‘golden cross’, which finally triggered a 170% BTC price rise.
The index, which uses a variety of factors to determine the sustainability of overall cryptocurrency sentiment, is currently at 70/100.
This is “greedy,” but has never been to the excessive levels seen during Bitcoin’s all-time high of 90/100 in March.
Nonetheless, research firm Santiment analyzed the sentiment and determined the most bullish sentiment for Bitcoin since January.
“Crowd sentiment has shifted towards Bitcoin following a stunning rebound above $66,000 on Wednesday (currently over $67,200),” reads part of X’s May 17 post.
Santiment added that for positive trends to continue, “FOMO” on the buyer side must remain low.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.