Bitcoin Cleared $65,000 This Week. Ignore the Noise, This Is the 1 Factor That Investors Need to Watch.

On the afternoon of July 15, Bitcoin (CRYPTO: BTC) traded above $65,000. While it didn't remain above that level for long, it may signal the beginning of a long-awaited recovery for the coin, which hadn't been at $65,000 in about four weeks.

Bitcoin is still 48% below its peak, and there is no shortage of commentary from so-called experts trying to figure out what variables are driving the price, ranging from favorable regulatory and industry developments to a relief bounce following a streak of bad news. Investors should simply ignore the near-term noise.

Here's the one factor that might matter most to Bitcoin holders right now.

Image source: Getty Images.

Focus on the exchange-traded funds

It's been 30 months since the spot Bitcoin exchange-traded funds (ETFs) were approved by the Securities and Exchange Commission. This kicked off what was the most successful ETF launch in Wall Street history, and legitimized the asset.

Investors still closely follow ETF flows. On July 14, these products saw $181 million in net inflows. This was welcome news. The move might have been spurred by slowing inflation, which could support lower interest rates sooner rather than later.

ETF inflows matter because they signal how much fresh demand there is from various sources of capital seeking Bitcoin exposure. These investment vehicles give investors a convenient way to access digital asset price action in a regulatory-friendly manner.

Wait another month, and the ETF capital flows could tell a different story due to ongoing volatility. A notable data point to keep tabs on is the asset base of the iShares Bitcoin Trust, currently at $47 billion. This is down from a peak of around $100 billion. The decline is representative of the current bear market Bitcoin is in.

Capital is chasing another market trend

Investors can be confident that Bitcoin ETFs will see tremendous inflows coinciding with the next bull market. It's just impossible to know when this could happen, although history says it's only a matter of time. Patient investors who remain focused on the long term have always reaped the rewards from the cryptocurrency's ascent.

Bitcoin's path to its next all-time high won't be easy. Global capital is chasing the hot trend, which is the artificial intelligence (AI) trade. The five major hyperscalers (Amazon, Microsoft, Alphabet, Meta Platforms, and Oracle) and the top chip sellers (Nvidia, Broadcom, Micron Technology, and Advanced Micro Devices) have a combined market capitalization of $20 trillion.

Bitcoin might be an afterthought for most investors these days.

Neil Patel has positions in iShares Bitcoin Trust. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Bitcoin, Broadcom, Meta Platforms, Micron Technology, Microsoft, Nvidia, Oracle, and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.