The cryptocurrency market trended higher on Thursday as traders who looked to ‘sell the news’ of the launch of multiple spot Bitcoin (BTC) exchange-traded funds (ETFs) have exhausted their supplies while inflows into the ETFs from BlackRock and Fidelity show steadily increasing demand.
“The primary driving force behind Bitcoin's recent headlines is the demand for spot ETFs,” said Greg Magadini, Director of Derivatives at Amberdata, in a note to Kitco Crypto. “It's evident that ETF Bitcoin flows have returned to positive territory, with a significant decrease in outflows from GBTC and increased inflows into other ETF symbols surpassing GBTC.”
"These flow trends are favorable for Bitcoin's recent rally, and the reduced outflows from GBTC indicate a stabilizing market,” he added. “The decreasing volatility in these flows is likely to contribute to a reduction in Bitcoin spot market volatility as well.”
It was a mixed and volatile trading day for stocks following new record highs on Wednesday, with some analysts suggesting the recent rally is unsustainable as it has been primarily driven by a concentrated group of megacaps, while the broader market has shown weakness. The S&P briefly spiked above 5000 for the first time in history during intraday trading.
At the closing bell, the S&P, Dow, and Nasdaq all managed to finish in positive territory, gaining 0.06%, 0.13%, and 0.24%, respectively.
Data provided by TradingView shows that Bitcoin bulls managed to maintain the momentum generated late on Wednesday and extended the rally on Thursday, pushing BTC to within striking distance of resistance at $45,600.
BTC/USD Chart by TradingView
At the time of writing, BTC trades at $45,500, an increase of 3% on the 24-hour chart.
According to analysts at QCP Capital, there are two key reasons for the move higher over the past week: a “reduction in GBTC flows/net positive BTC spot ETF inflows,” and “strong price action in US equities.”
“Daily GBTC outflows have reduced from $500-600 million daily to just $100-200million now,” they said. “Total inflows across all BTC ETFs are now positive.”
Despite “the hawkish-leaning Fed (with Powell pushing back on any cuts in March) and higher US yields on the back of a strong Feb [Non-farm payroll report] (353k actual v 180k expected), US equities continue to outperform, with the likes of NVDA and META rallying on strong earnings and positive headlines,” they said. “It is likely that any dip in equities will continue to be bought as underallocated investors chase returns.”
“On the back of this bullish sentiment, BTC and ETH are likely to follow, coupled with the BTC halving and ETH spot ETF narratives,” they added. “We've seen strong interest in accumulators which allow investors to buy BTC or ETH at a significant discount to current spot price. This is a great way to build a long position if one is bullish into the end of the year.”
Briefly addressing the derivatives market, QCP Capital noted that “BTC and ETH forwards are also elevated again, providing attractive opportunities to put on cash and carry trades and lock in yield (8-9% ann. yield) for the longer term.”
Market analyst Altcoin Sherpa said he doesn’t expect the next pullback until Bitcoin surpasses $46,000.
$BTC: Next significant area up is $46k IMO.
Price chopped below that 43.5k level for nearly a month; I think that we at least see a move to 46k before any significant pullbacks.
Still unsure of where we go in the midterm but still v. high time frame bullish myself. #Bitcoin pic.twitter.com/ympinumY4C— Altcoin Sherpa (@AltcoinSherpa) February 8, 2024
And market analyst Crypto Tony simplified the issue, saying that he remains bullish as long as Bitcoin holds above $43,600.
$BTC / $USD - Update
I remain bullish over $43,600 pic.twitter.com/uZ3Dwql5nA— Crypto Tony (@CryptoTony__) February 8, 2024
Altcoin market benefits from Bitcoin’s momentum
Bitcoin’s move higher was a boon to the altcoin market as the large majority of tokens in the top 200 recorded gains on Thursday.
Daily cryptocurrency market performance. Source: Coin360
Dymension (DYM) led the field with a gain of 31.7% as traders clamor to access the token and stake it with the hope of qualifying for multiple airdrops. BitTorrent (BTT) was the second biggest gainer with an increase of 28.2%, followed by Stacks (STX), which climbed 9%. Pendle (PENDLE) was the biggest loser with a decline of 9.1%, while Jupiter (JUP) fell 6.3%, and Conflux (CFX) lost 6.1%.
The overall cryptocurrency market cap now stands at $1.72 trillion, and Bitcoin’s dominance rate is 51.7%.
