Bitcoin Price Surges Above $96,000 on Institutional ETF Inflows

• The fact that Bitcoin has risen to above $96,000 indicates that more institutions have ventured into the cryptocurrency sector.
• The U.S. Bitcoin ETFs recorded more than 750 million net inflows, which increased their price sharply.
• The inflation levels in the U.S. at 2.7 helped deconjure the market fears in favor of the increase of Bitcoin.

Bitcoin reached a significant milestone on Tuesday evening, surpassing the $96,000 mark for the first time this year. The virtual currency rose by 5% in 24 hrs to hit highs of almost $96,654 per day and stabilized at approximately 95,000. This is the great performance of Bitcoin in the market as of November that proves the reappearance of the momentum.

One of the reasons why Bitcoin has been on a surge is the growing involvement of institutional investors. According to data provided by SoSoValue, out of the U.S.-based spot Bitcoin ETFs, over 750 million net inflows were recorded within a single day. Fidelity’s FBTC initiated this trend with over $12 billion in total, while Bitwise’s BITB followed closely with nearly $160 million in inflows. The influx of institutional capital has played a pivotal role in the recent price increase.

Bitcoin ETFs Absorb Market Supply

In January 2024, the introduction of Bitcoin ETFs greatly impacted the price movement of the digital asset. Bitwise CIO Matt Hougan believes that the long-run demand for Bitcoin ETFs would result in a market shortage. The situation is likened to gold, whereby Bitcoin ETFs have already taken in over 100% of the fresh supply, but the price did not respond to this rarity accordingly (Hougan). He guessed that in the event that ETF demand persists, the existing sellers might not have any more to sell, and the price might hence soar.

Source: TradingView

In addition to the ETF inflows, the price of Bitcoin has also been boosted by the publication of the inflation data in the US. The Consumer Price Index (CPI) report for December reached 2.7, as it was expected, thus dispelling fears of a possible jump in inflation. This information has positively influenced the price of Bitcoin in that it implies that the cryptocurrency would enjoy a stable macroeconomic environment.

Market Displays and Recording Liquidations.

The Bitcoin price explosion has taken a number of traders by surprise, and many short positions were being liquidated. Short liquidations amounted to approximately $688 million in the last 24 hours, as CoinGlass shows. It is in line with the high upward trend in the price of Bitcoin, as traders scrambled to hedge their positions as the rally came out of the blue.