Bitcoin is currently testing a critical resistance amidst multiple fundamental catalysts aligning. With inflows from US ETFs, surging M2 money supply in China, and increased institutional activity, BTC's upward momentum faces a pivotal test against retail investor behavior. Analysis of factors driving today's crypto king.
Bitcoin has recorded positive performance over the last 48 hours, climbing to $112,000 yesterday and pushing again to $111,600 this Saturday. On-chain data and capital movements reveal a gradual accumulation that could signal a new phase of explosive growth. However, this bullish momentum must now contend with volatility induced by retail investors, whose behavior remains unpredictable in this consolidation context.
First, US Bitcoin ETFs recorded net inflows of $20 million during recent trading sessions, according to data compiled by market analysts. This inflow, while modest compared to volumes seen in other bullish periods. Demonstrates a revival of institutional interest after several weeks of intermittent outflows.
This dynamic occurs as asset managers reassess their cryptocurrency exposure amid persistent macroeconomic uncertainty. ETFs allow institutions to gain Bitcoin exposure without the operational constraints of direct custody. BlackRock and Fidelity continue to dominate trading volumes, capturing the majority of incoming flows.
The correlation between ETF inflows and Bitcoin’s bullish momentum remains structurally strong. Each wave of institutional purchases through these investment vehicles mechanically reduces the available supply on exchanges, creating buying pressure that supports the price. Nevertheless, excessive euphoria around ETFs often coincides with local tops, so caution is warranted in the coming days as we approach the FOMC meeting.
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China has published figures revealing a significant expansion of its M2 monetary aggregate, reaching record levels that fuel speculation about a potential inflow of capital into safe-haven assets like Bitcoin. Historically, increased global liquidity has been a bullish factor for cryptocurrencies, which benefit from accommodative monetary policies.
This increase in Chinese money supply comes as Beijing intensifies its economic stimulus measures in the face of slowing domestic growth. Chinese investors, confronted with a stagnant real estate market and restrictions on foreign currency investments, could redirect some of this liquidity toward cryptocurrencies through OTC and offshore channels.
The link between global liquidity and Bitcoin performance is well-established. Monetary expansion phases generally coincide with crypto bull runs, while quantitative tightening triggers corrections. The current situation in China could catalyze a new wave of adoption if capital effectively finds its way to the crypto market.
Bitcoin’s current rally faces a critical test from retail investors, whose behavior oscillates between opportunistic accumulation and quick profit-taking. On-chain data shows that Short-term Holders are in unrealized loss territory, which typically precedes a rebound.
For now, Bitcoin needs to maintain $110,000, otherwise $108,400 or even $105,000 are the next targets. Conversely, sustained buying pressure should push BTC toward $116,000.
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Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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