Bitcoin Price Soars Past $71,000: Here’s Why

Bitcoin has surged 2.9% in the last 24 hours, reaching a high of $71,166 on Binance today, marking the highest price since May 21. This rally appears to be primarily fueled by robust inflows into US spot Bitcoin ETFs, with the sector experiencing its 16th consecutive day of net inflows.

Why Is The Bitcoin Price Up Today?

Yesterday alone, these ETFs saw an inflow of $886.6 million, with Fidelity leading at $378.7 million—setting a new record for the fund. BlackRock wasn’t far behind, with substantial inflows totaling $274.4 million. Other significant contributions included Ark with $138.7 million, Bitwise at $61 million, and the Grayscale Bitcoin and VanEck Bitcoin Trust recording $28.2 million and $4 million respectively.

Good morning fellow hodlers,

We had an absolute insane day of inflows yesterday with $886.6 million of inflows (that’s ~12 500 BTC)

Fidelity did $378.7 million, Blackrock did $274.4 million, Ark did $138.7 million and Bitwise 61 million.

Even $GBTC had inflows worth of $28.2… pic.twitter.com/KaDdmTrq9p

— WhalePanda (@WhalePanda) June 5, 2024

The sustained interest is further evidenced as BlackRock’s iShares Bitcoin ETF surpassed $20 billion in assets, becoming the fastest ETF to reach this milestone, reflecting significant momentum and investor enthusiasm.

Eric Balchunas, a Bloomberg ETF analyst, emphasized the scale of these inflows, stating, “Fidelity not messing around, big-time flows all around today for The Ten, nearly $1b in total. Second best day ever, since Mid-March. $3.3b in past 4wks, net YTD at $15b (which was top end of our 12mo est). The ‘third wave’ is turning into a tidal wave.”

Despite the positive inflow dynamics, Byzantine General (@ByzGeneral), a prominent crypto analyst, observed that the price surge could have been more pronounced. He highlighted the presence of substantial passive supply on spot exchanges, which might have tempered the price increase.

He noted yesterday, “High volume today, and the perps basis actually went down a bit. I think that we got good ETF flows today, but… They’re buying into a lot of passive supply on spot exchanges.” He further commented today, “What did I say, big ETF inflows. But because of all of the passive supply it’s like an unstoppable force colliding with an immovable object.”

Moreover, it’s important to note that the price increase was not driven by the liquidation of short positions in the BTC futures market, which saw only $27.58 million in shorts liquidated in the last 24 hours, according to Coinglass data.

However, Willy Woo, a renowned on-chain analyst, warned that a continued rise could trigger a significant short squeeze. Woo said via X, “Tapping 72k is the fuse that’s set to start a liquidation cascade. $1.5b of short positions ready to be liquidated all the way up to $75k and a new all time high.”

At press time, BTC traded at $71,075.

Featured image created with DALL·E, chart from TradingView.com