The cumulative value of cryptocurrencies is striving to surpass $1.8 trillion, with the market volume nearing the $100 billion mark. Investors are flocking back to exchanges, fueled by the excitement of Exchange-Traded Funds (ETFs), anticipating a renewed surge in growth. Despite not yet reaching March’s trading volumes, there is optimism that competition among market structures will achieve this goal soon.
The leading cryptocurrency, Bitcoin, has experienced a 5% drop to around $45,500. Although the initial buzz around ETFs has slightly diminished, the long-term impact is still anticipated. Spot Bitcoin ETFs started the last trading day of the week with selling pressure, but the volumes were not disappointing, with a cumulative $4.6 billion seen the previous day.
Investors have three main reasons to believe in the continuation of the upward trend. Firstly, Bitcoin is showing a “bull flag” pattern, indicating a general uptrend and consolidation, which is positive for altcoins. Secondly, funding rates in derivative markets have reset, suggesting potential for further support in the rise. Glassnode highlights strong institutional support based on CME data.
Lastly, a supply shortage is expected to drive prices up as ETFs are required to hold actual Bitcoin in reserves. With an inflow target of up to $150 billion, this could significantly exceed the current institutional holdings and lead to a scarcity in supply. The limited supply of Bitcoin and the biennial halving of new market supply, capped at 21 million, suggest that ETFs may have to split at some point, potentially leading to Bitcoin reaching seven-figure prices.
In summary, the crypto market is showing bullish signs with ETF excitement, a bull flag pattern for Bitcoin, reset funding rates indicating further support, and an impending supply scarcity that could lead to significant price increases.