Bitcoin Rally to 83,000 ? What It Takes...

👇1-11) It is only a matter of time until Bitcoin makes a new all-time high. The head-and-shoulders formation suggests a rally towards 83,000 soon, with the resistance line likely broken within the next few days. The ideal time for this resistance to break is either today, Friday, June 7, or next week, Wednesday, June 12.

Bitcoin is close to breaking the trendline + Head Shoulders Formation

👇2-11) We are bullish. A few days ago, we pointed towards the start of the global central bank easing cycle, which has now been confirmed with interest rates being cut in Canada, Denmark, and Europe this week. With US growth, employment, and consumer spending weakening, it will only be a matter of time until inflation slows.

👇3-11) Although the Fed has only cut once during the May-November period ahead of the US Presidential elections in the last 30 years, risk assets primarily depend on the odds the market associates with rate cuts—not necessarily the actual cuts. This keeps us bullish on risk assets in general, and we expect new all-time highs for Bitcoin.

👇4-11) However, if Bitcoin fails to make a sustainable new all-time high, the reason could be a sharp decline in Ether prices, as we pointed out earlier this week. We are monitoring the 3,725 support level. As traders and market analysts, we must consider every scenario and think ahead.

👇5-11) Fundamentally, we are less bullish on Ethereum and expect ETF demand for Ether to disappoint. Positioning in Ether futures is already stretched, and as SEC Gary Gensler said this week, it might take a while until those (S-1) ETH ETFs are approved. Futures positioning increase in ETH has lagged this week ($+0.3bn) as traders prefer to buy Bitcoin exposure at this point ($+2.2bn). The numbers speak for themselves.

👇6-11) Despite $+4.8bn of inflows during the last seven days, Bitcoin prices have only climbed by +3.1%. This is below the projected rally (+5.8%) predicted by our regression analysis. Our money flow indicators track Bitcoin's performance quite accurately, and while inflows were strong, more money is required to push up Bitcoin prices.

Money Flow Indicator (LHS, $bn) vs. Bitcoin Price Change (RHS, WoW %)

👇7-11) In March, the reactivation of old legacy wallets from 2011-2012 might have caused an unexplained sell flow hitting the market just when Bitcoin made new all-time highs. Money flow data indicated a dip buying mentality when Bitcoin dropped to 60,000 in April. However, the money flow indicator closely correlates with the weekly Bitcoin price change.

👇8-11) Our analysis indicates that for every +1% in Bitcoin price appreciation, it takes $+0.8bn of inflows or $+8bn of inflows to push up Bitcoin prices by +10%. While ETF flows are only one component of our money flow analysis, they recently accounted for roughly 35% of those flows. Hence, for a weekly Bitcoin rally of 5%, we would need $4.2bn of inflows, with the Bitcoin Spot ETFs seeing $1.7bn of inflows.

Money Flow Indicator ($bn) vs. Bitcoin Price Change (WoW %)

👇9-11) Overall, the $+15.4bn of Bitcoin Spot ETFs have caused Bitcoin to rally by +19% while Bitcoin is up +53% since their launch. However, the ETFs likely have a substantial signaling effect, allowing other traders to deploy more risk (and buy futures, for example). Most of this year’s Bitcoin returns are associated with the strong inflows from stablecoins.

👇10-11) To reach the 83,000 head-and-shoulders target (+17%), we would need to see $+13bn of inflows across various verticals – that’s what it takes. A breakout above the 71,600 trend line will naturally result in more upside buying through multiple products, but $+13bn requires quite some commitment. Nevertheless, we think this is possible as a weaker US employment market (unemployment rate at 4.0%) and lower inflation data next week (3.3%) will likely provide the macro backdrop for new all-time highs.

👇11-11) Our preferred trades are short-term Bitcoin upside (preferably through perpetual futures) and selectively a few Bitcoin miners (tactically) – notably Bitfarms, Bitdeer, and Marathon Digital – just for beta exposure. Implied volatility is relatively expensive, but we prefer higher beta exposure through leverage. Above 72,000 (last price 70,900), there appears to be $1.5bn in perpetual futures short positions being stopped. Hence, a trendline break could increase Bitcoin prices in the next few days.