The price of the leading cryptocurrency rose by 7% over the week amid inflows into ETFs. The market’s future direction hinges on breaking the historical range of $73,750-$74,400, according to CoinDesk analyst Omkar Godbole.
Over the past two years, this price corridor has repeatedly reversed trends. The expert cited three examples:
- First quarter of 2024. The rally following the launch of American spot ETFs halted at $73,750, after which prices gradually declined to $50,000.
- April of last year. The specified range halted Bitcoin’s fall from the $100,000 level—selling ceased around $74,400. The asset then reversed and in October reached a new high above $126,000.
- Beginning of this year. Investors expected support from the zone, but digital gold broke through this level and fell to $60,000.
Currently, the $73,750-$74,400 marks again serve as the main resistance. A confident breakthrough upwards will confirm buyers’ strength and the start of a new bull rally. Failure will indicate that the global downtrend since the October highs remains in force.
Reasons for Bitcoin’s Return to $73,000
According to analysts at XWIN Research Japan, the main drivers of the leading cryptocurrency’s growth were inflows into American spot ETFs and the mass closure of short positions.
At the end of February, amid geopolitical tensions, Bitcoin’s rate sharply declined. However, by March 2, the asset recovered to $70,000, and by March 5, it tested the $74,000 mark.
The resumption of capital inflows into exchange-traded funds played a key role in the rebound. On March 4 alone, Bitcoin ETFs attracted over $200 million, directly indicating a return of institutional demand.
The derivatives market provided an additional boost to the rally. Analysts recorded a sharp increase in open interest. Funding rates turned negative, indicating an excess of short positions. Further price growth triggered a cascade of liquidations and a short squeeze.
On-chain metrics present a mixed picture:
- Bearish signals: The 90-day realized profit and loss ratio remains below 1, and the volume of coins with “paper” losses is growing.
- Bullish signals: The Coinbase Premium Index returned to positive values, confirming active purchases by American investors.
Experts at XWIN Research noted a change in the status of the leading cryptocurrency. In times of global instability, investors increasingly use Bitcoin not only as a risky asset but also as an anti-crisis tool for preserving and safely moving capital.
Stabilization of ETF Outflows
Outflows from spot exchange-traded funds based on the leading cryptocurrency have stabilized after a prolonged decline, according to analysts at Glassnode.
The two-week net inflow chart has turned upwards. Experts believe this indicates a weakening of seller pressure after Bitcoin’s price consolidated above the $70,000 level.
Institutional players remain cautious, but the market is already showing the first signs of new asset accumulation.
Bitcoin’s “Structural Flaws”
Chamath Palihapitiya, founder of the venture company Social Capital, stated that the leading cryptocurrency has a “structural flaw” that hinders its widespread adoption at the level of governments and central banks.
In the podcast People by WTF, he noted that an asset for state reserves must meet strict criteria. Bitcoin lacks two key properties: privacy and fungibility.
Since the blockchain is transparent and transaction history is stored forever, the movement of funds is easily traceable. If some coins were involved in illegal operations, they lose “purity” and cease to be equivalent to other bitcoins. True fungibility is possessed only by fiat money and physical gold, where any unit is absolutely identical to another.
The traceability of Bitcoin reduces its appeal to central banks. Palihapitiya recalled that so far only the Czech National Bank has publicly confirmed the purchase of cryptocurrency. Gold remains the standard for reserves as it guarantees both privacy and fungibility.
The investor doubts that demand from states will trigger a new tenfold increase in the capitalization of the leading cryptocurrency. He suggested that this niche might eventually be filled by other projects capable of solving the problem of excessive transparency.
Meanwhile, Palihapitiya highly values the prospects of stablecoins, especially those backed by gold. According to him, such instruments can simplify global payments and settlements.
Back on March 3, K33’s head of research, Vetle Lunde, noted the end of Bitcoin’s sell-off.