Bitcoin Value Exceeded $47,000: Here Are Three Main Factors

In a remarkable development, Bitcoin’s price has exceeded the $47,000 threshold, a milestone that has garnered the interest of both investors and analysts.

This notable price shift can be linked to three primary factors: the surge of investments into spot Bitcoin exchange-traded funds (ETFs), significant movements in the futures market, and a technical breakout following a phase of compression.

Here’s a detailed examination of each of these contributing factors.

1: Bitcoin ETFs Experience Record Inflows

The market recorded an impressive influx of $403 million into spot Bitcoin ETFs on February 8, marking the third-largest single-day net inflow, despite a withdrawal of over $101.6 million from the Grayscale Bitcoin Trust (GBTC).

Since the inception of these ETFs on January 11, the cumulative inflow has exceeded $2.1 billion (over 200,000 BTC), indicating a growing demand for Bitcoin among investors.

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Eric Balchunas, a prominent Bloomberg ETF analyst, shared insights via X regarding the exceptional performance of these financial instruments.

Of course GBTC is a factor here and so I guess you could argue some of the Nine’s aum is BYOA? Not enough tho for me to write any of this off as a lot of GBTC outflows were FTX and prop traders arbing the discount which is cash likely not destined for another btc ETF. I think the…

— Eric Balchunas (@EricBalchunas) February 8, 2024

He noted, “After just one month on the market, [BlackRock’s] IBIT and [Fidelity’s] FBTC stand out among the Top 25 ETFs by assets, each exceeding $3 billion.”

Balchunas further discussed the competitive landscape, suggesting, “The real unseen force here is competition.

The launch of 10 ETFs on the same day, featuring some heavyweight issuers, truly spurred a hustle for inflows, showcasing an aggressive pursuit of market share.”

2: Futures Market Dynamics And Short Liquidation

The Bitcoin futures market has experienced a significant short liquidation event, with total liquidations amounting to $52.09 million in the last 24 hours, according to data from Glassnode.

This event was underscored by the largest single liquidation order on Bitmex (XBTUSD), valued at $5.11 million.

Crypto analyst Skew commented on the situation, noting,

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“I’d say majority or a decent portion of the revenge shorts fading the grind higher were squeezed out above $45K into current price area. Spot flows even more significant here especially with longs starting to chase price. Note decreasing perp discounts more towards potential premiums in the future, if another squeeze higher occurs with high perp premiums & spot selling that would likely be the local high of this rally.”

$BTC Binance / Bybit Open Interest & Delta
I’d say majority or a decent portion of the revenge shorts fading the grind higher were squeezed out above $45K into current price area

Spot flows even more significant here especially with longs starting to chase price

note… pic.twitter.com/0DJtOYocFa

— Skew Δ (@52kskew) February 9, 2024

Vetle Lunde, a Senior Analyst at K33 Research, noted a recovery in the CME basis back to levels observed prior to the ETF influx, along with a significant rise in open interest.

“CME basis has recovered to pre-ETF levels of 15%. Open interest has surged higher amidst the recovery, growing by 15.6k BTC (16%) in the past 3 days. Virtually all growth stems from active market participants – non-ETFs. The OI among this cohort has recovered to pre ETF levels,” Lunde remarked.

CME basis has recovered to pre-ETF levels of 15%.

Open interest has surged higher amidst the recovery, growing by 15.6k BTC (16%) in the past 3 days.

Virtually all growth stems from active market participants – non-ETFs. The OI among this cohort has recovered to pre ETF levels. pic.twitter.com/RjMNp8Ic1o

— Vetle Lunde (@VetleLunde) February 9, 2024

3: Technical Breakout Indicated By The Bollinger Band Width (BBW)

A vital signal for the recent price movement was provided by the Bollinger Band Width (BBW) indicator, which indicated a breakout from a phase of compression.

The BBW fell to as low as 0.11, suggesting a period of low volatility and an impending ‘squeeze.’

In previous instances when the Bollinger Band Width (BBW) dipped to similarly low levels, Bitcoin experienced significant price movements shortly thereafter.

These historical occurrences offer insights into potential future trends.

On October 13 of the previous year, when the BBW reached a comparable low, Bitcoin subsequently initiated a substantial rally, achieving an increase of over 30% in just 10 days.

Conversely, during mid-August 2023, Bitcoin’s value saw a 15% decline over a brief 8-day period. Additionally, at the start of January 2023, Bitcoin experienced a remarkable rise, climbing by 40% in merely 17 days.

Reflecting on these historical trends, the BBW has once again demonstrated its significance as an indicator for forecasting Bitcoin’s next major price movement.

At press time, BTC was trading at $47,053.

Bitcoin Price Chart | Source: Coinstats

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