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Bitcoin price rose as high as $71,954 on May 20, its highest in 38 days, on-chain data trends highlight lingering reactions to recent US macroeconomic indices and impending Ethereum ETF approval as key catalyst behind the rally.
Why is Bitcoin ($BTC) price up today?
Bitcoin price surged to a 38-day peak of $71,954, on May 21, 2024, largely due to a reports from Bloomberg analysts that the US Securities and Exchange Comission is set to approve Ethereum ETF.
After a volatile start to the month, Bitcoin price fell as low as $60,207 on May 11. But since then the crypto market has flipped bullish thanks to a successive bullish whispers emerging from US regulators, ranging from the US Non-Farm Payrolls, to the latest Consumer Price Index (CPI) data.
Since Bloomberg Sr. ETF Analyst, Eric Balchunas statement on Monday afternoon that ETH spot ETF approval chances are now 75%, Bitcoin price surged 9% from $66,859 to $71,934 before finding support around the $71,000 level at the time of writing on May 20.
$1.8 Billion Decline in Exchange Reserves Could Drive $BTC Toward $75k
Undoubtedly, bullish tailwinds from the positive sentiment surrounding Ethereum ETF approval is pivotal to the latest wave of the $BTC price rally.
However, on-chain data suggests a continuation of the bullish accumulation trend that began shortly after the latest US CPI data release.
CryptoQuant Exchange Reserves chart below shows the real-time changes balance of all bitcoins deposited in exchange-hosted wallets. Declining Exchange Reserves occur when majority of Bitcoin holders are bullish, and are opting to shift their holdings into long-term storage.
On May 15, the US labor of Bureau Statistics announced that the US core inflation declined to 3.4% in April 2024. The $BTC exchange reserves (blue) trend line above shows how Bitcoin investors reaction to the dovish US CPI report may have contributed to the 9% $BTC price breakout in the last 48 hours.
Bitcoin investors held a total of 1,946,808 $BTC as of May 15, when the cooler-than-expected CPI data was released. But since then there has been a clear trend of investors shifting large amount of $BTC into long-term storage.
At the time of publication on May 21, the total bitcoin deposited on exchanges and trading platforms has now dropped to 1,919,030 $BTC. This implies that investors have removed 27,778 $BTC (worth approximately $1.96 billion) from the supply of coins readily available to be traded on exchanges.
When such a large number of coins are removed from the market supply, it signals bullish sentiment among holders, and it also increases the odds of a price breakout, if it coincides with a demand surge.
This partly explains why $BTC price rapidly jumped 9% within just 12-hours, after Bloomberg analysts announced the likelihood of Ethereum ETFs approval by the SEC.
Bitcoin Price Forecast: Imminent Breakout above $75k?
Bitcoin price looks set for another leg-up after the 9% surge recorded in the 24-hour timeframe. With $BTC exchange reserves still trending lower than last month’s bottom, there’s a chance that an official positive verdict from the SEC could spark another breakout above $75,000 in the days ahead.
IntoTheBlock’s global in/out of the money price data also affirms this bullish stance.
It shows that at the current prices, 98.7% of all active Bitcoin holders are in profit. Hence majority of $BTC traders could be unwilling to sell, at least, until the SEC’s verdict on Ethereum ETFs expected before the May 23/24 deadline.
If this scenario holds, $BTC will likely consolidate the $68,900 support level, where over 1.45 million investors had previously acquired over 954,500 $BTC.