Signs are mounting that the worst of the crypto market may be over. The Bitcoin price exceeded the $85,000 mark for the first time a week ago, and has done so several times throughout the week since then. Although the world’s largest cryptocurrency is now trading slightly below that mark, it is nevertheless showing a clear recovery from the low reached just two weeks ago around $77,000. Another massive sell-off that would push the Bitcoin price down to $70,000 may not occur after all. This is also indicated by the capital inflows into the spot Bitcoin ETFs.
Breather in the Crypto Market
Investors who were hoping to broaden their horizons at the turn of the year and explore cryptocurrencies for the first time may be disappointed. On the very day Donald Trump took office, Bitcoin reached a new all-time high of over $109,000, only to experience a price collapse of almost 30% in the two months that followed.
So anyone who invested when Bitcoin rose to $100,000 or more is still significantly in the red today. Nevertheless, this week was one of the few in which things at least showed some improvement and no further bad news followed. The trade tariffs and the temporary impact on the economy have now been priced in, so the markets are slowly recovering. The crypto market included.
The Bitcoin price has now recovered by almost 10% from its low reached just 10 days ago, even though $BTC is trading lower today than yesterday. Bulls and bears are currently battling for an important level: the 200 EMA. This is currently at around $85,500 and has not yet been sustainably exceeded.
A price above the 200 EMA would also improve short-term Bitcoin forecasts, as it is the most closely followed indicator in technical analysis. However, the price would likely have to rise above it either today or next week at the earliest, as trading on weekends is rather limited, which usually leads to slightly declining prices.
Institutional Investors Are Buying Again
Most brokers and exchanges warn you even before you register that 70% or more of their users lose money while trading and investing. This isn’t because prices won’t rise in the long term, but because they are often driven by their emotions and prefer to sell quickly when they experience a loss before losing even more. Afterward, prices often rise quickly, so many people buy back in. This, of course, leads to a loss in the long run.
These users, who tend to lose money on the stock market rather than gain it, are primarily private investors. Institutional investors conduct precise analyses and risk assessments and don’t act emotionally. They also bring large sums of money into the market and, through their investments alone, can create a certain mood in the market, thus influencing prices to a certain extent. And now it turns out that institutional investors are investing in Bitcoin again after a long dry spell.
This week alone, over $165 million has been invested in Bitcoin via Spot Bitcoin ETFs. Since these ETFs are primarily used by institutional investors, the capital inflows accurately reflect the sentiment of these investors. Furthermore, capital inflows have been positive for four consecutive days, as more investors are buying Bitcoin than selling it.
We haven’t seen such a long streak of capital inflows in weeks, so the worst may be over, or at least the chances of Bitcoin falling to $70,000 again are diminishing.
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