A prolonged run of Bitcoin (BTC) exchange-traded fund (ETF) inflows may offset the steady decline in spot BTC buying, a report by Bitfinex notes.
Continued Bitcoin ETF Inflows Can Help Sustain BTC Price
According to the report, a multi-day trend of spot Bitcoin ETF inflows is emerging, which could help support the BTC price despite weakening demand from spot buyers. The report adds:
With Bitcoin spot market buying slowing, evidenced by spot Cumulative Volume Delta flattening when the price reached $63,500, we foresee BTC moving in a range in the near term.
To approach new highs, Bitcoin must breach the key resistance level of around $64,600, a figure last seen in late August. The report notes that in the absence of sustained spot purchase, partial correction or consolidation is the most likely scenario.
Recently, it has come to light that excessive leverage might be waning in the crypto market. Bitcoin’s recent upside movement is likely driven by organic spot buying rather than leverage trading, as seen from the divergence between price recovery and the corresponding increase in open interest.
The report remarks that “sustained ETF inflows could buoy the BTC price.” Bitcoin ETFs have attracted around $397.2 million in the past week alone. It’s worth highlighting that these inflows come during a month that has historically given below-average returns to Bitcoin investors.
The chart below shows that September has consistently been the worst month regarding average returns from BTC. Conversely, October and November have historically been the best-performing months, delivering average returns of 22.9% and 46.8%, respectively.
The report suggests that Bitcoin could see further upside if ETF inflows remain positive and “traditional finance markets like the S&P 500 continue to rally.”
Fed Rate Cuts, US Elections To Play Key Role
Other factors, such as interest rate cuts initiated by the US Federal Reserve (Fed) this month and the upcoming US presidential elections in November, can potentially sway Bitcoin’s future price trajectory.
The Fed recently cut interest rates for the first time in nearly four years on September 18, slashing rates by 50 basis points (bps). A week after the rate cut, BTC is up 6.2%, while the second largest cryptocurrency, Ethereum (ETH), is up 13.6%, according to data from CoinGecko.
While interest rate cuts are typically intended to stimulate the economy and address rising unemployment amid a high interest-rate environment, some crypto experts, including BitMEX co-founder Arthur Hayes, are not entirely sure that lower rates will help Bitcoin.
Meanwhile, the upcoming US presidential election, which will see the pro-crypto Republican candidate Donald Trump facing off against Democratic candidate Kamala Harris, can impact Bitcoin.
While the popular consensus within the crypto industry seems to be leaning toward Trump – largely due to his vision to make the US the “crypto capital of the world” – Harris has recently vowed to support emerging technologies like AI and digital assets while safeguarding investor and consumer interests. BTC trades at $63,669 at press time, commanding a total market cap of $1.255 trillion.
