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With Bitcoin crossing $98,000, can bulls push past resistance to hit a new all-time high?
As the crypto market gradually turns green, Bitcoin is back above $98,000. With a 24-hour surge of 1.14%, the biggest crypto is gradually inching closer towards the $100,000 mark.
While the short-term recovery projects a potential breakout rally, institutional investment continues to decline. Amid the rising outflows from Bitcoin spot ETFs, could this be a dead cat bounce for Bitcoin? Let’s explore.
Bitcoin Breakout Rally Hits 50% Fibonacci Barrier
In the 4-hour price chart, $BTC’s price trend shows a channel breakout rally. This bullish breakout follows a reversal from the local support trendline.
Currently, the rally faces resistance at the 50% Fibonacci level at $98,611. Along with key supply zones near this level, a long-standing descending trendline adds additional bearish pressure.
Due to this opposition, $BTC’s price action shows a short-term pullback, with the price down to $98,269. Despite the strong resistance, the overall short-term recovery has shifted the Chaikin Money Flow Index from negative to positive.
With rising inflows, the bullish recovery has increased the breakout chances. Furthermore, the Bollinger Bands are projecting a potential bullish reversal after remaining sideways over the last week.
Rising Leverage Drives The $BTC Rally
One of the key drivers behind Bitcoin’s recent pump appears to be the leverage market. A recent tweet by Maartunn, a crypto quant analyst, highlights a surge in Bitcoin open interest. “Leverage-driven pump,” he tweeted.
The open interest (OI) has risen by $2.4 billion over the past 24 hours, reflecting a 7.2% increase. This surge has pushed open interest back to nearly $35 billion.
The rise in open interest reflects the anticipation among Bitcoin traders for a high-volatility move. However, the trend’s direction cannot be determined solely based on open interest.
Declining Demand in Bitcoin ETFs
Adding to the uncertainty, U.S. Bitcoin spot ETFs saw a net outflow of $364.93 million on February 20. Only two Bitcoin ETFs recorded net inflows.
These were Bitwise with $24.14 million and VanEck with $4.18 million. Surprisingly, the key sellers included BlackRock, which shifted from consistent buying to minor offloading.
BlackRock’s Bitcoin ETF saw $112.05 million in outflows, followed by ARK and 21Shares, which dumped $98.35 million. Fidelity offloaded $88.24 million. Grayscale’s Bitcoin Trust and Mini Bitcoin Trust disposed of nearly $94.62 million.
Despite the short-term decline in Bitcoin ETF demand, the overall trend remains positive. According to a recent tweet by Ki Young Ju, the founder of Cryptoquant, the bull cycle should persist unless significant ETF outflows occur.
A prolonged period of net negative demand would be a key trigger, potentially signaling the start of a new bear cycle. As the CEO put it:
“Demand and supply are all that matter. Everything else is just noise.”
Bitcoin Price Targets
With the Cryptoquant CEO staying optimistic about the overall ETF market, the possibility of a breakout rally in Bitcoin’s price remains significant.
According to the Fibonacci levels, a breakout from the immediate resistance at $98,611 will likely propel Bitcoin to the $100,000 mark.
Beyond this, the next crucial resistance lies at the $108,000 supply zone, just above the horizontal level of $107,123. Optimistically, Bitcoin’s next all-time high could be at $112,058, based on the 1.272 Fibonacci level.
On the flip side, key support levels are the 38.2% Fibonacci level at $96,703. Additionally, a potential dip to the broken resistance trendline near the $97,000 mark could offer a post-retest bounce.