Bitcoin Price Forecast: BTC holds onto recent gains, with $70,000 in sight

Bitcoin price today:$66,800

• US Bitcoin Spot ETFs recorded a second straight day of inflows on Tuesday.
• Arkham Intelligence data shows that Tesla has recently moved $760 million worth of Bitcoin into other wallets.
• Glassnode’s report highlights declining demand and supply for Bitcoin, predicting an increase in volatility ahead.

Bitcoin’s (BTC) price stabilizes around $67,000 on Wednesday after rallying and breaking above a key resistance barrier on Tuesday. The rise in BTC comes after US Spot ETFs recorded a second straight day of inflows of over $373 million on Tuesday. However, some concerns were raised due to the recent transfer of funds by Tesla, while a report from Glassnode highlights that BTC is expected to experience volatility in the short term.

Bitcoin Insitutional demand shows strength despite Tesla funds movement in BTC

Institutional demand for Bitcoin shows signs of strength. According to Coinglass data, US Bitcoin Spot ETFs recorded a second straight day of inflows of $373.30 million on Tuesday. Studying the ETF flow data can be useful for observing institutional investors’ sentiment. If the magnitude of inflows persists or increases, it would signal a rise in demand for Bitcoin, further contributing to its price rally.

Bitcoin Spot ETF Net Inflow chart. Source: Coinglass

Despite the rising institutional demand, Arkham Intelligence data shows that Tesla has moved $760 million worth of Bitcoin into other wallets since Tuesday. This transfer of funds is still unclear if it’s internal shuffling or selling.

“Even if they sold, the impact would be slightly more than half of the German government’s. Their realized profit was $816 million, while Tesla’s is $515 million as of today,” said Ki Young Ju, founder and CEO of CryptoQuant, in a Twitter post.

A Glassnode report on Tuesday highlights a notable divergence between supply and demand for Bitcoin, which has traded range-bound for over seven months. With low volumes across on-chain and futures markets and a HODLer-dominated environment, the scene is set for heightened volatility in the near future, the report says.

For the demand side, Glassnode analysts explain that the rate of new capital inflow has continued to wane since the $73,000 all-time high set in March. Measuring the Realized Profit or Realized Loss metrics can act as proxies for the magnitude of new capital entering or exiting the network.

Bitcoin Absolute Realized Profit+Realized Loss chart. Source: Glassnode

Moreover, the Binary CDD metric clearly assesses the demand side. This metric tracks the expenditure of “holding time” in the market, tracking when holders of old supply transact large volumes. 

The graph below shows a relatively light volume of coinday destruction, suggesting that long-term investors remain relatively inactive within the current price range. This signals investor attention, and new demand inflows within this range are relatively muted.

Bitcoin Binary CDD chart. Source: Glassnode

The report explains that available coins are also constricting on the supply side, with several measures of “active supply” compressing to relatively low levels. As shown in the graph below, acute tightness across the Bitcoin supply side has been a precursor for a regime of heightened volatility.

Bitcoin Illiguid and Long-Term Holders Supply chart. Source: Glassnode

The confidence of new investors in the market trend has also remained within the neutral range, highlighting that spending by new buyers is not drastically different from the price of the original acquisition.

Despite the slightly negative sentiment caused by the recent tumultuous market conditions, the confidence level among new investors is notably higher than in both the 2019-2020 and 2021 markets. 

Bitcoin New Investors Confidence in Trend chart. Source: Glassnode

Bitcoin Price Forecast: BTC closes above $66,000 resistance

Bitcoin price broke and closed above the psychological level of $66,000 on Tuesday, rising 1.5%. As of Wednesday, it trades slightly down around $67,000.

If the $66,000 holds as support, BTC could continue its ongoing rally to retest its July 29 high of $70,079.

The Moving Average Convergence Divergence (MACD) indicator further supports Bitcoin’s rise after posting on Monday a bullish crossover on the daily chart. The MACD line (blue line) moved above the signal line (yellow line), giving a buy signal. It also shows rising green histogram bars above the neutral line of zero, suggesting increasing upward momentum.

Furthermore, the daily chart’s Relative Strength Index (RSI) shows that Bitcoin is nearing its overbought level. It trades at 65, close to the overbought level of 70. If it enters the zone on a closing basis, traders will be advised not to add to their long positions because the chances of a pullback would increase. Another possibility, however, is that the rally continues and the RSI stays in the overbought zone. If it enters overbought and then exits back into the neutral level of 50, it will be a sign of a deeper correction.

BTC/USDT daily chart

However, if Bitcoin fails to find support around the $66,000 level and closes below it, BTC could extend the decline by 6% and retest its $62,000 support level, which aligns with the 61.8% Fibonacci retracement level at $62,059 (drawn from July high of $70,079 to August low of $49,084).