ETFs Absorb Triple New BTC Supply: Key Bitcoin Insights

Bitcoin (BTC) starts the new week on a strong note as it returns to $67,000, aligning with movements in traditional financial markets. The largest cryptocurrency is inching closer to facing its final resistance, which includes past and current all-time highs at $69,000 and $73,800. Market participants are keenly watching to see if BTC will hit these marks in the coming days, with several factors possibly contributing to a bullish trend. Among these are cues from United States economic policy, including the Federal Reserve’s release of minutes from its May meeting and upcoming U.S. unemployment data.

Traders are increasingly confident that Bitcoin has reached a local bottom and anticipate upward movements after two months of stabilization. There is also an interesting divergence happening: while prices are higher, sentiment lingers at levels seen during the March peak. This combination could indicate a more sustainable path to new price discoveries.

Bitcoin is showing renewed vigor, inching close to $67,000 during the Asia session after a brief dip at the weekly close. This minor drop was due to geopolitical uncertainty from Iran, but markets quickly shrugged it off, and BTC/USD maintained a 10% gain for May. According to CoinGlass, most immediate overhead resistance is just below $68,000. IT Tech, a contributor to CryptoQuant, noted the liquidation levels surrounding the spot price.

Market participants are generally optimistic about the latest BTC price action. Crypto Damus highlighted the significance of last week’s bullish engulfing candle, which erased previous losses and closed at $66,210. Michaël van de Poppe, founder and CEO of MNTrading, reiterated his expectation of a gradual rise toward new highs for Bitcoin, predicting consolidation and slow upward movements rather than massive volatility. Despite this, he expects altcoins to outperform during Bitcoin’s consolidation phase.

Some traders like Credible Crypto anticipate a drop to $60,000 or even lower before another upward movement. The macro landscape this week sees a shift from economic reports to various speaking engagements by senior officials from the Federal Reserve. Although Chair Jerome Powell is not among the speakers, the language used by other officials will be closely monitored for cues on future policy. The minutes from the May Federal Open Market Committee meeting, where interest rates were discussed, will be released on May 22, followed by U.S. jobless claims which could introduce some volatility for risk assets.

Attention is increasingly turning to favorable liquidity conditions in the U.S. and beyond. Financial commentator Tedtalksmacro suggested in his latest analysis that the crypto bull run is “far from over.” He pointed to an early liquidity cycle and an M2 money supply that still shows ample room for easing liquidity conditions, bolstering optimism about sustained market growth.

The renewed interest in U.S. spot Bitcoin exchange-traded funds (ETFs) is also shaping up to be a significant driver for BTC. After weeks of struggle since Bitcoin’s all-time highs in March, these ETFs have seen a resurgence in interest, with inflows hitting nearly $1 billion last week — the best performance since those highs. Tedtalksmacro pointed out that this demand is occurring in a landscape where Bitcoin’s block subsidy is half of what it was in March, meaning ETF providers need to purchase more BTC than miners can produce daily.

One of the most bullish indicators is Bitcoin exchange reserves, which have plummeted to their lowest levels since 2017. As of May 19, there were 1,918,417 BTC available for purchase on major trading platforms, around 400,000 BTC less than a year ago. Fahrer’s comment on this phenomenon highlighted the combination of “demand shock” and “inelastic supply” as forward-driving factors.

The Crypto Fear & Greed Index, which assesses the sustainability of overall crypto sentiment using various factors, currently stands at 70/100. Although this level denotes greed, it is not as extreme as during Bitcoin’s all-time highs in March, which was 90/100. Research firm Santiment noted the shift in sentiment towards Bitcoin after it rallied above $66K and then $67.2K. The firm cautioned that “fear of missing out” (FOMO) among buyers should remain muted to sustain the positive trend.