Institutional “fuel” pushes Bitcoin to break $30,000, how long can the market keep soaring?

Institutional demand helped Bitcoin surge past $30,000, but how long can this market rally last?

With the good news of TradFi (traditional finance) entering the crypto market, Bitcoin continued to rebound, breaking through $30,000 in the early morning of June 22 Beijing time, with a 24-hour increase of more than 10% and an 80% rebound this year. The last time BTC exceeded $30,000 was in April 2023. Tokens such as Ethereum, Cardano, and Solana also saw gains. This rebound triggered a wave of short liquidation in the entire market, with the total amount of short liquidation in 24 hours exceeding $173 million according to Coinglass data.

On the other hand, US stocks wiped out the moderate gains of the past few trading days, with the Nasdaq Composite Index and the S&P 500 Index falling 0.7% and 0.5%, respectively.

Investors are increasingly optimistic about the prospects of BlackRock and other major institutions laying out crypto business.

Earlier this week, BlackRock submitted an application for a spot Bitcoin ETF that will track the underlying market price of Bitcoin. Coinbase is listed as the proposed ETF’s Bitcoin custodian. BlackRock has maintained a strategic partnership with Coinbase, even under immense regulatory pressure from the US Securities and Exchange Commission (SEC).

Crypto supporters say that more investors will be able to invest in cryptocurrencies at much lower risk. Importantly, a small portion of traditional institutional clients interested in spot BTC ETFs is enough to push the market higher. Ruslan Lienkha, director of the market at Web3 crypto and fiat service provider YouHodler, commented, “The joining of the largest investment firm [BlackRock] seems to be completely reshaping the crypto market in the near future.”

Bloomberg’s senior ETF analyst Eric Balchunas commented, “BlackRock’s application changes everything and reignites competition.” After BlackRock’s announcement, other asset management companies also submitted their own spot Bitcoin ETF applications, including WisdomTree and Invesco, which had been rejected by the SEC.

The EDX cryptocurrency exchange, supported by major TradFi players, was also launched earlier this week. The exchange is backed by Fidelity Digital Assets, Charles Schwab, and Citadel Securities, and will offer trading in four tokens in the United States, including Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. After the news broke, Bitcoin Cash (BCH) also saw an increase, rising 25% on the same day.

The moves by traditional financial companies have to some extent dispelled the gloom brought about by SEC crypto enforcement actions, including lawsuits against exchange operators Binance Holdings Ltd. and Coinbase Global Inc., where the SEC designated a large number of digital tokens as unregistered securities.

Meanwhile, in Europe, Deutsche Bank has applied for regulatory permission to operate a digital asset custody service. Crypto Is Macro Now newsletter author Noelle Acheson wrote: “It’s unlikely to go into this business lightly unless its big clients express enough interest, because the cost is not low.”

Hayden Hughes, co-founder of social trading platform Alpha ImBlockingct, tweeted: “This rebound was supported by institutional demand, with BlackRock’s announcement of a Bitcoin ETF and EDX Markets boosting Bitcoin as people hope traditional institutions can increase the liquidity depth of the crypto market.”

Investors are closely watching macroeconomic indicators to understand the direction of the crypto market, including the prospect of further tightening of monetary policy by the Fed after this month’s pause in rate hikes.

Traders are also waiting for further clarity on the expected scale of Chinese economic stimulus, as the People’s Bank of China recently cut borrowing costs. Tony Sycamore, market analyst at IG Australia Pty, said in his blog that the potential stimulus effect of China on Bitcoin has not been “sufficiently released”.

The futures market shows that bullish sentiment is on the rise

BTC futures data shows that traders are shifting from mostly short to long positions. According to Coinglass data, 54.24% of traders are bullish on Bitcoin. With the decrease in spot trading volume and the net outflow of Bitcoin from exchanges, the price may further fluctuate. Typically, when the net outflow of Bitcoin from exchanges increases, selling pressure decreases, which can push short liquidation to have a greater impact on BTC prices.

The Fear and Greed Index for Bitcoin has reached a 3-month high, highlighting investors’ increasing willingness to take on risk assets.

Some analysts say that the momentum for further gains remains, as Bitcoin has broken through a key resistance level that analysts have been watching.

Vijay Ayyar, international market manager for India’s largest cryptocurrency exchange CoinDCX, said in an interview with CNBC: “A series of spot Bitcoin ETF applications released by large institutions undoubtedly restored the bullish sentiment to the cryptocurrency market. BTC’s main support level is $25,000, and we’ve seen more of this trend driven by pure spot purchases rather than short liquidation.”

Bitcoin is still far below its 2021 all-time high of $69,000. Ayyar believes that from a market structure perspective, BTC has now broken the major downward trend that began in April this year and lasted for about two months, so the next step will be to test the $32,000 level, with potential to rise to $36,000, then $45,000 to $48,000 if successfully broken through.

Author: BlockingBitpushNews Mary Liu

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