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Bitcoin (BTC) surged to a new two-year high, above the $50,000 mark on Monday, driven by increasing optimism over institutional buying and significant inflows into spot Bitcoin exchange-traded funds (ETFs).
However, resistance at this key level, coupled with potential sell-offs from significant players, raises questions about the sustainability of the current rally.
Spot Bitcoin ETF inflows accelerate, fuelling bullish sentiment
As Wall Street trading commenced on February 12, Bitcoin swiftly accelerated towards the $50,000 milestone, reaching $50,229.
The surge comes on the heels of strong spot Bitcoin ETF inflows late last week, which saw over $1.1 billion in net fresh funds pouring into these investment vehicles according to a CoinShares report shared on Monday.
The United States spot Bitcoin ETFs have continually attracted increasing interest, with inflows reaching their second-best day the week prior, totalling over $400 million among nine products. Despite outflows from GBTC, ETF flows remained positive for 11 consecutive days, signalling growing confidence among investors in these investment vehicles.
Traders are hopeful that ETFs alone could propel Bitcoin’s price higher, potentially challenging all-time highs in the coming months.
In addition, BTC has maintained its upward trajectory despite concerns about potential selling pressure from the liquidation of $1.6 billion worth of Grayscale Bitcoin Trust (GBTC) holdings by Genesis, a crypto lender under bankruptcy protection.
Resistance at the $50K level and potential breakout
Traders and analysts are closely monitoring the price action, with many expressing optimism about Bitcoin’s potential to surpass $50,000. Popular trader Mac highlighted Bitcoin’s consolidation below the previous top, suggesting a potential breakout towards $50,000 in the near term.
— Mac 🐺 (@MacnBTC) February 12, 2024
Fellow trader Jelle echoed similar sentiments, noting Bitcoin’s historical tendency to swiftly reach the other end of its range, implying the possibility of tackling all-time highs.
— Jelle (@CryptoJelleNL) February 12, 2024
However, despite the bullish momentum, some analysts urge caution. Keith Alan, co-founder of trading resource Material Indicators, emphasized the importance of retesting support levels before further upside. Alan noted the significant sentiment for Bitcoin to reach $50,000 but warned of the potential for a short squeeze if BTC breaks above the Golden Pocket (.618 Fib). He underscored the limited ask liquidity above $50,000, suggesting a scenario where shorts could face substantial pressure.
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