Market Analysts Describe Bitcoin’s Latest Move as a “Borrowed Rally” — Here’s Why

Bitfinex Alpha reported that the lower-than-expected US inflation figures for June propelled Bitcoin to its highest daily close since June 22, but the rise is not yet backed by strong and sustainable demand.

According to the report, the recent movement in Bitcoin was largely driven by the repricing of macroeconomic expectations and the interest rate outlook. However, the market did not see sustained spot buying, a positive Coinbase premium, or continued ETF inflows independent of the price level. Bitfinex Alpha therefore characterized the rise as “borrowed strength.”

Analysts have identified the $68,000 to $68,300 range as a critical decision point for Bitcoin. They added that continued inflows into spot Bitcoin ETFs are necessary for the price to maintain its position above this range.

Yesterday, spot Bitcoin ETFs saw a total net inflow of $181.1 million, with BlackRock’s IBIT fund accounting for $138.9 million of that amount. Bitfinex Alpha stated that flows in the coming days will show whether the outflow on July 13th was temporary and whether a new wave of strong inflows has begun.

The report warned that despite one of the most positive macroeconomic data releases of the year, the lack of strengthening investor demand could invalidate the expectation of an increase in July.

According to Bitfinex Alpha, Bitcoin’s rejection from the $68,000-$68,300 range, coupled with funding rates rising above 15% and high demand for put options, could increase the risk of a decline. In such a scenario, the current price range could be maintained, or Bitcoin could even fall below its lows of $58,000.

*This is not investment advice.