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10x Research: BTC trend has entered a critical period, this indicator may help break new highs

BlockBeats2024/05/30 04:16
By:BlockBeats
Original title: This ONE Indicator Will Decide If Bitcoin Will Make New All-Time Highs
Original source: 10x Research
Original translation: Wenser, Odaily Planet Daily


Editor's note: After the breakthrough of Ethereum spot ETF, the market has once again entered the bull market sentiment cycle stage. While the amount of funds for Bitcoin spot ETF continues to grow, when Bitcoin price can break through the previous high in March has become the focus of many people again. Odaily Planet Daily will summarize and compile the key indicators of Bitcoin price breaking new highs shared by 10x Research in this article for readers' reference. (Note: This article is only a sharing of 10x Research's views and does not constitute investment advice.)


Key indicators of Bitcoin's price rise


For most people, the rise and fall of Bitcoin prices seem to be random fluctuations and unpredictable, but we want to point out the key drivers of Bitcoin prices. If we have a correct understanding of these factors, we can also relatively accurately judge the turning points and subsequent trends of Bitcoin prices. It is no coincidence that Bitcoin prices were slightly weak in January this year, and they rose all the way in March, but have entered a state of consolidation in the past two months.


The key turning point for Bitcoin has arrived


Two weeks ago, Bitcoin entered a key turning point.


Retail trading volume (measured in the Korean market) has been weak, which shows that retail investors in the market do not understand what is happening in the Bitcoin market now, and they are likely to be caught in the greed of FOMO (fear of missing out). We are confident that Bitcoin will soon reach new all-time highs, and this report and more to come will help us convince readers that this is indeed the case.


Year-to-date, approximately $54.6 billion has flowed into the cryptocurrency market, including $25.6 billion in stablecoins, $15.5 billion in leveraged perpetual futures, and $13.5 billion in Bitcoin spot ETF inflows. Although this analysis does not include several smaller data points, it has been compiled to identify the sources of most of the funds.


Below, we will show you when these flows stopped, when they resumed, and whether they will continue. This information will be crucial in determining the direction of Bitcoin's price (up or down).


Bitcoin and various fund flows (stablecoins, ETFs, leveraged futures)


Stablecoin inflows have slowed significantly since Bitcoin's halving on April 20. After the halving, USDT issuer Tether completed $2.7 billion of its own inflows, while USDC issuer Circle completed $500 million of outflows. For comparison, Tether has accumulated $20.1 billion in inflows from the beginning of the year to date.


When the Bitcoin spot ETF began trading on January 11, we saw $611 million in net ETF inflows, and the first day of Bitcoin spot ETF trading volume reached a staggering $4.6 billion. Although stablecoin issuers have billions of dollars ready for this, the purchase volume in January is disappointing.


Part of the disappointment came from the large outflows from Grayscale's GBTC ETF, but the main reason was the unexpected rise in inflation on January 11, with the CPI index as high as 3.4%, higher than the expected 3.2% and higher than the 3.1% recorded last month.


When the CPI index was announced on February 13 at 3.1%, lower than the expected 3.4%, that is, inflation slowed down, Bitcoin spot ETF inflows gradually resumed. ETF inflows turned positive from negative in late January, but did not start to accelerate slightly until the release of CPI data on February 13. But when inflation rose again to 3.2% on March 12, Bitcoin ETF inflows stopped immediately because the market ruled out the expectation of 2-3 interest rate cuts.


Bitcoin price trends and market sentiment over the past six months


In other words, (to some extent) Bitcoin changes direction depending on whether CPI is higher than the previous month (high CPI means bearish, low CPI means bullish).


The result is that Bitcoin prices have gradually fallen from around $73,000 to around $60,000, and the decline has finally slowed down due to the speech of dovish Federal Reserve Chairman Powell on March 20. He assured the market that the Fed expects to cut interest rates three times in 2024.


A similar situation occurred on April 10 when CPI exceeded expectations of 3.4% to 3.5%, and Bitcoin fell again to $60,000 and fell to around $56,500 on April 30 amid weak Hong Kong ETF flows.


Following the same old trick, Fed Chairman Powell "stepped in again" at the May 1 FOMC meeting to stop Bitcoin's downward trend.


On May 15, the CPI report hit an expected 3.4% (down from 3.5% last month) but in line with expectations of 3.4%, and Bitcoin rebounded. More importantly, Bitcoin spot ETF inflows resumed. Traders who understand how Bitcoin reacts to CPI should have the confidence to trade in the opposite direction relative to last month's CPI index.


From March 12, when the CPI rose to 3.2%, to May 15 (a total of about 46 days), when the CPI data was consistent with the market forecast of 3.4%, Bitcoin spot ETF purchases were only $1 billion; since May 15, we have seen inflows of about $1.5 billion for 7 consecutive days.


Next key time point: June 12


With the next CPI data release scheduled for June 12, we expect Bitcoin spot ETF inflows to remain strong over the next two weeks, which should help Bitcoin reach new all-time highs.


When the market expected another disappointing increase in inflation on May 15, our model predicted a small drop in Bitcoin prices. As we model inflation over the next two months, we may see inflation hovering around current levels and soon trending downward. If inflation reaches 3.3% or lower, Bitcoin prices should hit new all-time highs.


This will continue to provide "some motivation" for Bitcoin spot ETF investors to allocate Bitcoin and support Bitcoin prices.


According to our model, inflation will gradually become less of a problem. Not only will it become a moderate boost, but it is likely to become a strong factor as time moves into the end of summer - because inflation will gradually decline according to the model's predictions.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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