Bitcoin price extends gains as capital inflows near all-time highs

Bitcoin price is on a tear this week, extending the gains made since spot ETFs started trading in January.
BTC could nick $60,000 as Glassnode reports relatively strong demand for speculation and trading activity.
If the king of crypto loses the $50,000 milestone, it could trigger a sell-off, likely going as low as $40,000.

Bitcoin (BTC) price remains northbound, a status that was invigorated by Monday reports on MicroStrategy and BlackRock. With growing optimism in the market, the risk appetite for investors is also proving elastic.

Also Read: Bitcoin price peaks at $54,910 as BlackRock spot BTC ETF, IBIT, trades above $1 billion on Thursday

Bitcoin capital inflows near all-time highs

In a February 27 newsletter, on-chain market intelligence firm Glassnode indicated that the risk appetite among Bitcoin investors has increased, citing “growing signs of speculation appearing across capital flows, exchange activity, derivatives leverage, and even institutional demand.”

The highlight of the Glassnode report was on capital inflows with the report citing a “steady and healthy inflow of capital into the [BTC] asset.” The report notes that the recovery rally for Bitcoin price is near completion with capital progressively pouring into the BTC market. With this influx, the realized market capitalization of BTC is nearing$460 billion, 3% below its all-time high.

This remarkable performance has seen the profitability of BTC investors improve significantly, with the average investor now holding an unrealized profit of over 120% per coin.

Further, exchange inflow volumes now record levels not seen before, with short-term holders dominating the flows depositing over $2 billion of volume to exchanges per day. According to Glassnode, this points to “a relatively strong demand for speculation and trading activity.”

Another metric that is also recording near all-time highs is the open interest in both futures and options markets. With the sum of all open long and short positions at their peak, directional short-sellers are actively betting against the uptrend.

While Glassnode notes at least $465 million in liquidation volume over the last month, a Monday report by the FXStreet team cited almost $100 million in shorts liquidated as BTC approached the $55,000 milestone and over $250 million in total liquidations once BTC nicked the $57,000 milestone.

Bitcoin price outlook as Glassnode notes heightened capital inflows in BTC market

Bitcoin price continues to hold above $57,000 with prospects for more gains expected with the Relative Strength Index (RSI) inclined north. This suggests rising momentum accentuated by the Awesome Oscillator (AO) and Moving Average Convergence Divergence (MACD), which both remain in positive territory.

Increased buying pressure could see Bitcoin price tag the $60,000 psychological level, 5% above current levels. In a highly bullish case, the leading cryptocurrency by market capitalization could have a chance at retaking its peak price of $69,000. For this to happen, Bitcoin price must foray into the supply zone between $63,329 and $67,999 and break and close above its midline at $65,664 on the daily time frame. Such a move would confirm the continuation of the uptrend.

BTC/USDT 1-day chart

Conversely, early profit taking could see Bitcoin price drop below the $55,000 threshold. If sellers have their way, the decline could see BTC test $50,000.

Notice the Spent Output Profit Ratio (SOPR) position at 2.10 shows that a pullback could be due. As a 30-day moving average (MA), anytime this ratio is above 1 it shows that token holders who are sitting on unrealized profits are leaning toward cashing in on their gains.

The pullback supposition is accentuated by the RSI gliding above 70, which shows that while BTC is not ripe for selling, it is at high risk of correcting as an aftermath of an overbought asset.

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

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