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    BTC Price Outlook: Bitcoin OTC markets have so little supply they will be buying off exchanges

    Source Fxstreet
    Feb 28, 2024 19:00
    • Bitcoin price shattered the $63,000 milestone on Wednesday with total liquidations nearing $300 million.
    • BTC could extend the gains to $65,000 amid expected increased demand on public exchanges.
    • Amid frothing FOMO, investors should exercise caution as the markets are at high risk of a correction.

    Bitcoin (BTC) price exploded past the $63,000 milestone on Wednesday during the afternoon hours of the Asian session. The steering theme remains the spot BTC exchange-traded funds (ETF) narrative, which made BTC easily accessible to Wall Street institutions.

    Also Read: Bitcoin tags $60,000 for the first time in more than two years

    Crypto ETF FAQs

    What is an ETF?

    An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.

    Is Bitcoin futures ETF approved?

    Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.

    Is Bitcoin spot ETF approved?

    Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.

    Institutions deplete Bitcoin OTC supply

    Bitcoin (BTC) price continues to record an impressive rally this week, breaking past two milestones, the $55,000 level on Tuesday and the $60,000 psychological level on Wednesday. The latest move has seen almost $300 million in total liquidations.

    With the surge, on-chain market intelligence firm Glassnode revealed plummeting levels of BTC supply over the counter (OTC), which could compel institutions to buy Bitcoin from public exchanges. The ensuing demand pressure could send Bitcoin price above $61,000.

    Capital inflows from institutions remain the key driver as the wealth management industry seeks exposure via ETFs. As reported on Wednesday, the allure of BTC ETFs has surpassed that of Gold, according to Bloomberg’s Eric Balchunas, who noted that there is a decent chance that the assets under management (AUM) for Bitcoin ETFs could surpass those of Gold ETFs in less than two years.

    With the week recording explosive price action accentuated by strong capital inflows, the Bitcoin realized cap has experienced a near full recovery, increasing to a value of $467.2 billion. The current value is just 0.22% below the $468.3 billion peak, based on Glassnode data.

    Amid the epic surge in Bitcoin price, one online analyst on X, @DaanCrypto, observed, “Bitcoin [price] has not seen a correction of more than 5%” for over a month. That is since its move above the $38,500. This shows resolve among the bulls, with investors keeping their profit-booking appetite in check.”

    Bitcoin price outlook as BTC depletes over-the-counter holdings

    Bitcoin price remains above the $60,000 psychological level with the potential for extended gains amid rising momentum. The odds of BTC reclaiming its $69,000 peak recorded on November 10, 2021, remain likely as BTC halving is fast approaching.

    For a shot at challenging the $69,000 all-time high, Bitcoin price must break and close above $63,329, the midline of the supply zone extending from $62,905 to $65,664. As it stands, Bitcoin price is just about 10% below its peak price.

    From a technical standpoint, the odds still favor the upside despite elevated risk levels of a correction seen by the overbought status indicated by the Relative Strength Index (RSI). The Spent Profit Output Ratio (SOPR) above 1 shows that the owners of the spent outputs are in profit at the time of the transaction.

    The RSI inclination to the north signifies rising momentum, empowered by the strong presence of bulls in the market. This is seen with the Moving Average Convergence Divergence (MACD) and Awesome Oscillator (AO), which remain in positive territory, accentuating the bullish thesis.  

    BTC/USDT 1-day chart

    On the other hand, the RSI position above 70 shows that BTC is already massively overbought and at high risk of a correction, especially with the SOPR position above the 1 threshold.

    If the bears seize the market, Bitcoin price could retest the $55,000 milestone or  extend to the $50,000 threshold. 

    Disclaimer: For information purposes only. Past performance is not indicative of future results.
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