Bitcoin ETF Investors Buy the Dip: Traders Capitalize on Market Dip with $300M Inflows
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2024-07-09 10:02
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Bitcoin (BTC), the leading cryptocurrency by market value, experienced a sharp decline of over 17% in the past four weeks, dropping to $57,200. This decline caused significant volatility in memecoins and other risky digital assets. However, the broader market outlook remains optimistic, with several supportive macroeconomic factors suggesting a potential recovery once current supply pressures subside.

 

Quick Take 

  • Bitcoin ETFs saw nearly $300 million in net inflows on July 8, indicating strong investor confidence despite recent market declines.

  • The G-7 economies are in an expansion phase, encouraging investment in growth-sensitive assets like bitcoin.

  • The U.S. CPI slowdown may lead to Fed rate cuts, potentially boosting demand for bitcoin.

  • Technical analysis suggests BTC could soon gain upward momentum, with a crucial retest of the $58,000 resistance level on the horizon.

BTC ETFs Record Almost $300M in Inflows

Spot Bitcoin ETF inflows on July 8 | Source: CoinDesk 

 

On July 8, spot bitcoin exchange-traded funds (ETFs) saw nearly $300 million in net inflows, marking the highest buying activity since early June, according to a report from CoinDesk. BlackRock’s IBIT led the inflows, followed by Fidelity’s FBTC. Despite significant selling pressures from sources like the Mt. Gox repayments and German government BTC transfers, investors view these as buying opportunities. CoinShares reported digital asset investment products saw inflows totaling $441 million, reflecting confidence in the market's resilience.

 

Read more: Mt. Gox Resumes Bitcoin and Bitcoin Cash Repayments Amid Market Uncertainty

 

Bitcoin’s History Suggests 9% Average Returns in July

Historically, July has been a bullish month for the crypto market, with an average return of 9%, according to a report on CoinDesk. This trend is expected to continue, bolstered by the positive macroeconomic indicators and renewed interest in Bitcoin ETFs. The recent inflows into BTC ETFs signal strong investor confidence, despite ongoing market turbulence.

 

Bitcoin dominance | Source: TradingView 

 

Meanwhile, Bitcoin’s dominance has steadily increased over the past six months. The figure has been rising especially since the fourth Bitcoin halving which took place in April 2024. At the time of writing, Bitcoin dominance holds above 54%, an indicator of rising investor confidence in the leading crypto amid the downward market sentiment recently. 

 

Bitcoin Faced the Crucial Resistance at $58,000

Bitcoin's price remains in bearish territory, currently below the 200-day exponential moving average (EMA). The price is attempting to surpass the weaker resistance at $57,000. If successful, BTC is likely to rise and retest the stronger resistance at $58,000, which aligns with the 200-day EMA.

 

Upwards Momentum on the Horizon

BTC/USDT price chart | Source: TradingView 

 

On the weekly timeframe, BTC faces significant resistances that could potentially reject any rally. However, the stochastic RSI, a key indicator, is showing signs of a bullish crossover from the bottom, which occurs roughly every six months. This crossover is happening now, suggesting a potential momentum boost for Bitcoin.

 

The stochastic RSI's double bottom on the weekly chart is a notable event. This pattern can provide a substantial momentum boost, potentially dragging Bitcoin back into a bull market uptrend. Despite a fakeout in early June, the current setup indicates that a revival could be underway, starting with this momentum shift.

 

Other Macroeconomic Factors Supporting Bitcoin’s Uptrend

Here’s a look at some other supporting macroeconomic factors from around the world that have also contributed to Bitcoin’s rebound above $57,000: 

 

G-7 Economies in Expansion Phase

OECD composite leading indicators | Source: CoinDesk 

 

The G-7, a group of advanced economies, is currently in an expansionary phase of the business cycle, according to the OECD's composite leading indicator. This phase typically encourages investors to deploy funds into risky, growth-sensitive assets like bitcoin and stocks. The indicator has crossed above 100, signaling above-trend growth and acceleration, which bodes well for BTC and other risk assets.

 

CPI Slowdown and Fed's Potential Rate Cuts

The U.S. Bureau of Labor Statistics is expected to report a 3.1% annual increase in the consumer price index (CPI) for June, down from May's 3.3%. This slowdown indicates progress toward the Federal Reserve's 2% inflation target, increasing the likelihood of rate cuts. Such cuts could further drive demand for bitcoin. Historically, weaker-than-expected CPI prints have boosted inflows into bitcoin ETFs, supporting the cryptocurrency's market value.

 

Read more: Bitcoin Price Experiences Slight Dip After Fed Decisions and CPI Data

 

Wall Street's Tech Optimism

NDX/SPX ratio at record highs, a bullish signal for Bitcoin? | Source: CoinDesk 

 

Wall Street's tech sector remains highly optimistic, as evidenced by the new record highs in the ratio between the Nasdaq index (NDX) and the broader S&P 500 (SPX). Since 2017, Bitcoin has moved in tandem with this ratio, often rallying when tech stocks outperform. The current surge in the NDX/SPX ratio signals a bullish outlook for Bitcoin.

 

Investor Concerns and Market Reality

Despite concerns about a potential meltdown in U.S. stocks, indicators suggest that the equity market is not in a bubble. Margin debt growth remains below equity market capitalization, and investor positioning in S&P 500 and Nasdaq futures is neutral. This stability, combined with a steady performance in gold, supports the broader macroeconomic environment, favoring assets like Bitcoin.

 

Bullish Outlook for Bitcoin

While the recent decline in Bitcoin's price has caused concern, the broader economic indicators and investor behavior suggest a potential recovery. The expansionary phase of the G-7 economies, expected CPI slowdown, and tech sector optimism on Wall Street provide a supportive backdrop for Bitcoin. Additionally, the significant inflows into BTC ETFs indicate a renewed interest in the cryptocurrency. As the market navigates through current challenges, Bitcoin's resilience and potential for growth remain strong.

 

Source:CoinDesk
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