Author: Nancy Lubale, CoinTelegraph; Translated by: Bai Shui, Jinse Finance
Summary
Bitcoin prices are correcting, but strong ETF inflows, high network activity, and whale accumulation indicate that BTC is likely to break through $140,000.
Spot Bitcoin ETFs have seen a net inflow of $2.9 billion in two weeks, continuing the previous upward trend.
The decline in exchange balances and the increase in trading volume Z-score indicate that overall demand is rising.
In the past 24 hours, the price of Bitcoin has dropped by 1.4%. Its trading price is down 6% from the all-time high of $109,000 set on January 20. Nevertheless, some fundamentals, on-chain data, and technical indicators suggest that Bitcoin's upward potential is not yet exhausted.
Spot Bitcoin ETF inflows mirror BTC's historical upward trends
The latest Bitcoin rebound is accompanied by strong demand from investors for spot Bitcoin exchange-traded funds (ETFs), with a net inflow of $2.9 billion into spot Bitcoin ETFs over the past two weeks.
The chart below shows that since the launch of the US spot Bitcoin ETF in January 2024, these investment products saw a net inflow of approximately $8.5 billion from February 13 to March 13, 2024, peaking at a single-day inflow of $1.045 billion on March 12, 2024.
Spot Bitcoin ETF fund flow. Source: Glassnode
Similarly, between November 6, 2024, and December 16, 2024, cumulative daily inflows reached $5.7 billion, consistent with Bitcoin's rise from $67,000 to $108,000 during the same period, an increase of 60%.
If ETF inflows continue, Bitcoin is likely to resume its upward trend and set a new all-time high.
Bitcoin market volatility index: Risk appetite
The increase in funds flowing into the spot Bitcoin ETF indicates a surge in risk appetite, evidenced by the decline in the Chicago Board Options Exchange (CBOE) Volatility Index (VIX). This index measures expected market volatility over the next 30 days.
Bitcoin network economist Timothy Peterson emphasizes that the VIX index has significantly dropped from 55 to 18 over the past 25 trading days.
A VIX index below 18 indicates a 'risk appetite' environment, favorable for assets like Bitcoin.
The analyst stated, "In the foreseeable future, this will still be a 'risk appetite' environment."
Chicago Board Options Exchange Volatility Index. Source: Timothy Peterson
Peterson's model has an accuracy rate of 95%. If the VIX remains low, the model predicts a target price of $135,000 within the next 100 days.
Bitcoin continues to see strong accumulation
The accumulation behavior of Bitcoin whales reinforces risk appetite sentiment, as they have been increasing their holdings even in the face of rising prices. Glassnode data shows that the Bitcoin accumulation trend score (ATS) is at 1 (see the chart below), indicating that large investors are actively accumulating.
According to Glassnode data, the surge in trend scores indicates that almost all groups are shifting from distribution to accumulation. This change resembles the accumulation pattern observed in October 2024, when Donald Trump won the US presidency and Bitcoin's price soared from $67,000 to $108,000.
Bitcoin accumulation trend score. Source: Glassnode
Supplementary data from Santiment shows that addresses holding 10 to 10,000 BTC have accumulated a total of 83,105 BTC in the past 30 days.
Santiment stated in a post on social platform X on May 13:
With the active accumulation by these large wallets, it may just be a matter of time before Bitcoin breaks the coveted $110,000 all-time high, especially after the US and China paused additional tariffs.
Bitcoin 10-10,000 BTC holdings chart. Source: Santiment
Overall, this is a positive signal, as the continued accumulation indicates bullish sentiment among this group of investors.
Decline in exchange Bitcoin balances
On May 15, exchange Bitcoin balances fell to 2.44 million coins, the lowest level in six years. According to the chart below, over 110,000 Bitcoins have been moved from exchanges in the past 30 days.
BTC reserves on exchanges. Source: CryptoQuant
A decrease in exchange Bitcoin balances suggests that investors may be withdrawing their tokens to self-custody wallets, indicating a lack of willingness to sell in anticipation of future price increases.
Increased network activity
As cryptocurrency investor Ted Boydston emphasized in an article on May 15 on platform X, Bitcoin's upward potential is supported by increasing network activity.
The Bitcoin trading volume Z-score measures the difference between current trading volume and average trading volume. It is commonly used to assess network activity and market interest.
The chart below shows that this indicator has sharply risen from negative territory, approaching 1. An increase in the trading volume Z-score, especially when close to or exceeding 1, has historically been associated with rising Bitcoin prices.
"This is a good sign for accelerating Bitcoin price increases," Boydston commented, adding, "Once the Z-score breaks 1, Bitcoin should enter a bull market."
BTC rounded bottom pattern target price is $140,000
From a technical perspective, the Bitcoin price has formed a rounded bottom pattern on the daily chart (see below). Bulls are currently focused on pushing the price above the dominant pattern neckline at $106,660.
If the daily candlestick closes above this level, it will confirm a bullish breakout of the rounded bottom pattern, leading BTC into the price discovery phase, with a technical target price set at $140,000, a 37% increase from current levels.
BTC/USD daily chart. Source: TradingView
The Relative Strength Index (RSI) is at 70 and has a bullish crossover with the SMA, indicating that the market environment remains favorable for upward movement, and prices may even break through $140,000.
BTC price has broken through a bullish flag pattern on the weekly chart, expected to rebound to $150,000.
