The price of the leading cryptocurrency rose 7% over the week, driven by inflows into ETFs. The market's next direction hinges on breaking through the historical range of $73,750-$74,400, according to CoinDesk analyst Omkar Godbole.
This price corridor has repeatedly reversed trends over the past two years. The expert provided three examples:
- First Quarter of 2024. The rally following the launch of U.S. spot ETFs stalled at $73,750, after which prices gradually fell to $50,000.
- April of Last Year. The specified range halted Bitcoin's decline from $100,000 — sell-offs ceased around $74,400. The asset then reversed and in October hit a new high above $126,000.
- Beginning of This Year. Investors hoped for support in this zone, but digital gold broke through this level and dropped to $60,000.
Currently, the $73,750-$74,400 range serves as the main resistance. A confident breakout would confirm buyer strength and signal the start of a new bullish rally. Conversely, failure would indicate that the global downtrend since the October highs remains intact.
Reasons for Bitcoin's Return to $73,000
According to analysts from XWIN Research Japan, the main drivers behind the rise of the leading cryptocurrency were inflows into U.S. spot ETFs and widespread short position closures.
At the end of February, amid geopolitical tensions, Bitcoin's price sharply declined. However, by March 2, the asset recovered to $70,000, and by March 5, it tested the $74,000 mark.
A key factor in the rebound was the renewed influx of capital into exchange-traded funds. On March 4 alone, Bitcoin ETFs attracted over $200 million, indicating a resurgence of institutional demand.
The derivatives market also provided additional momentum for the rally. Analysts noted a sharp increase in open interest, while funding rates turned negative, signaling an oversupply of short positions. The subsequent price rise triggered a cascade of liquidations and a short squeeze.
On-chain metrics present a mixed picture:
- Bearish signals: The 90-day realized profit and loss ratio remains below 1, and the volume of coins with "paper" losses is increasing;
- Bullish signals: The Coinbase Premium index has returned to positive values, confirming active buying from American investors.
XWIN Research experts noted a shift in the status of the first cryptocurrency. During periods of global instability, investors increasingly use Bitcoin not only as a risk asset but also as a crisis tool for preserving and safely transferring capital.
Stabilization of ETF Outflows
Outflows from spot exchange-traded funds based on the first cryptocurrency have stabilized after a prolonged decline, analysts at Glassnode reported.
The two-week net inflow chart has turned upward. Experts believe this indicates a weakening of selling pressure after Bitcoin's price stabilized above $70,000.
Institutional investors remain cautious, but early signs of new accumulation of the asset are appearing in the market.
Bitcoin's "Structural Deficiencies"
Chamath Palihapitiya, founder of venture firm Social Capital, stated that the first cryptocurrency has a "structural deficiency" that hinders its widespread adoption by governments and central banks.
In the People by WTF podcast, he noted that an asset for state reserves must meet strict criteria. Bitcoin lacks two key properties: privacy and fungibility.
Due to the blockchain's transparency and the permanent storage of transaction histories, the movement of funds is easily traceable. If some coins have been involved in illegal activities, they lose their "cleanliness" and cease to be equivalent to other Bitcoins. Only fiat money and physical gold possess true fungibility, where any unit is absolutely identical to another.
The traceability of Bitcoin diminishes its appeal to central banks. Palihapitiya reminded listeners that only the Czech National Bank has publicly confirmed the purchase of cryptocurrency. Gold remains the standard for reserves, as it guarantees both privacy and fungibility.
The investor doubts that demand from states will trigger a tenfold increase in the market capitalization of the first cryptocurrency. He suggested that this niche may eventually be filled by other projects capable of addressing the issue of excessive transparency.
Nonetheless, Palihapitiya holds a high opinion of the prospects for stablecoins, especially those backed by gold. He believes such instruments could simplify global payments and settlements.
Recall that on March 3, K33's head of research, Vetle Lunde, noted the end of Bitcoin sell-offs.