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Bitcoin Back Above $63,000: Will FOMO Fuel Another Rally Or Lead To A Bust?

The Bitcoin price made a strong comeback on Friday after witnessing a significant amount of bearish pressure throughout the past week. On Wednesday, May 1, the premier cryptocurrency fell below the $60,000 mark for the first time in almost two months.

On Friday, May 3, the price of BTC recovered above the $60,000 level, going as high as $63,000 in the past day. However, the question is – can the Bitcoin price enjoy a sustained rally following this latest resurgence?

How Long Will The BTC Price Rally Last?

In a recent post on the X platform, Santiment pointed to a shift in investors’ position and sentiment on the Bitcoin price following the recent surge above $62,000. According to the on-chain analytics site, traders on the Binance platform are “going from liquidated shorts to longs” after the latest price increase.

While this shift in sentiment might signal renewed optimism in the premier cryptocurrency, Santiment sounded a warning bell for enthusiasts watching the Bitcoin price and looking to get into the market. The blockchain firm said in its post: 

For the rally to continue, we don’t want to see FOMO rising too much higher than what it appears to be now.

Bitcoin Price

FOMO, or “fear of missing out,” is a phenomenon where investors hastily purchase in-demand assets out of fear of missing out on potential gains. While it can drive the asset to a higher price in the short term, excessive FOMO often results in unsustainable bullish trends and subsequent downturns.

What’s more, crypto prices tend to move in the opposite direction of the crowd’s expectations. Hence, if the majority of traders are betting on the Bitcoin price to rise, there is a great likelihood that the cryptocurrency’s value will experience a drop.

Behind The Bitcoin Price Surge

As of this writing, the Bitcoin price stands at around $62,871, reflecting a substantial 6% increase in the last 24 hours. Although the catalyst for this latest Bitcoin rally remains unclear, on-chain data shows that recent whale activity might have triggered the bullish momentum.

In a recent post on X, CryptoQuant CEO and founder Ki Young Ju revealed that Bitcoin whales acquired 47,000 BTC in a single day. Ju also said that while this class of investors might have included ETF-associated addresses, the recent spike in “balances for whale addresses” is not ETF-related.

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Bitcoin Market Dynamics Still Positive Post-Halving – Bitfinex Analysis

In the midst of the dramatic changes that have occurred in the cryptocurrency space after the Bitcoin halving event, Bitfinex provides a perceptive analysis that reassures investors that the market dynamics of BTC have remained positive in the post-halving period. Bitfinex examines the on-chain data and finds encouraging signs for Bitcoin in spite of the United States economy’s current state of uncertainty in its most recent Alpha report, which was released on April 22.

Bitcoin Market Dynamics Remains Bullish

According to the Hong Kong-based crypto platform, exchange withdrawals of Bitcoin are currently at levels not seen since January 2023. This simply indicates that a lot of investors are putting their assets in cold storage in expectation of price rises.

Also, the exchange noted that long-term investors’ aggressive selling has not yet caused the usual pre-halving price decline, which suggests that new market participants are absorbing the selling pressure quite well, highlighting the tenacity of the present market structure of Bitcoin.

The Bitfinex Alpha report revealed that the average daily net inflow from spot Bitcoin Exchange-Traded Funds (ETFs) is $150 million. Given the ETFs’ inflows far exceeding the $30 and $40 million daily issuance rate of BTC following the halving, this significant supply and demand imbalance could encourage further price appreciation.

Bitfinex further claims the massive purchases of spot Bitcoin ETFs, which have dominated the entire year’s market narrative, may decline. However, recent ETF outflows have shown that ETF demand may be starting to stabilize.

It is important to note that the recently concluded Halving cut down miners’ reward from 6.25 BTC to 3.125 BTC. As a result, miners are now modifying their operating tactics in order to sustain their activities against the decline in reward following the Halving.

Thus, the amount of Bitcoin that miners are sending to exchanges has significantly decreased, which may indicate that they are selling ahead of time or collateralizing their holdings to upgrade infrastructure. Consequently, this could possibly lead to a gradual increase in selling pressure rather than a sudden drop in value at the Halving.

New BTC Whales Surpassed Old Whales

Since the conclusion of the fourth Halving, on-chain data shows a significant rise in new Bitcoin whales. CryptoQuant Chief Executive Officer (CEO) Ki Young Ju, reported the development, noting that the initial investment made by the new whales in Bitcoin is nearly twice that of the old whales combined.

According to the data, the total holding by these new whales, which are short-term holders, is valued at $110.6 billion. Meanwhile, the old whales, which are long-term holders, own a whopping $67 billion worth of BTC. This change in whale demographics may impact Bitcoin’s future course and the dynamics of the cryptocurrency landscape as a whole.

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Bitcoin ETF Netflows May Experience Rebound If This Price Is Attained, Analyst Explains

In line with the decline in Bitcoin’s price, the spot Bitcoin ETF market has appeared rather gloomy in recent days. According to data from analytics firm BitMEX Research, these BTC ETFs have recorded a negative netflow for the last four trading sessions. 

This situation has been marked by large levels of Grayscale’s GBTC outflows and the record low inflows for the other ETFs, mainly the market leaders BlackRock’s IBIT and Fidelity’s FBTC. However, amidst these persistent declining netflows, Ki Young Ju, a prominent analyst and Chief Executive Officer at Cryptoquant, has predicted a possible resurgence in the spot Bitcoin ETF market.

Analyst Pinpoints $56,000 Level As Critical To Bitcoin ETF Recovery

In a post on X on March 22, Ki Young Ju shared that a rise in spot Bitcoin ETFs netflows could occur even as the BTC price decline continues. Using data from the historical netflow trends, the analyst noted that demand for Bitcoin ETFs usually kicks in when the cryptocurrency traces to certain support levels. 

Young Ju stated that, in particular, new BTC whales, especially ETF buyers, have shown to have a $56,000 on-chain cost basis. This suggests that the new significant holders of Bitcoin, particularly those invested in ETFs, usually purchased Bitcoin at an average price of $56,000.  Following this trend, the crypto quant boss believes the spot Bitcoin ETF market could experience massive inflows if BTC reached the specified price level.

For now, Bitcoin’s price has oscillated between $62,000 and $68,000, as seen in the last week. However, Young Ju believes that such a descent is quite feasible as price corrections usually see a maximum decline of 30%. Using BTC’s most recent high of $73,750, the analyst predicts the asset price could still trade as low as $51,000. 

BTC Price Overview

At press time, Bitcoin continues to trade at $64,065.74, representing a decline of 3.73% and 7.17% in the last one and seven days. Meanwhile, the asset’s daily trading volume is down 3.53% and valued at $39.62 billion. 

Following historical trends of the bull cycle, it is possible that BTC may have reached its price peak leading up to the halving event in April. If that is the case, Bitcoin may likely not return to previous high price levels soon and could experience further price drops in the coming weeks.  

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