Bitcoin Eyes Recovery Amid ETF Inflows and Market Dynamics
Bitcoin (BTC) is trading 5.5% above its nine-month low of $74,500 reached on Monday, with hopes of a rebound toward $85,000. According to Cointelegraph, a potential "squeeze" toward $85,000 is anticipated as Bitcoin recovers from its multimonth lows. The return of spot Bitcoin ETF inflows could further fuel BTC price recovery in the short term. Bitcoin bulls are striving to maintain the recent recovery to $78,000, with traders optimistic about further price gains.
Analyst Daan Crypto Trades noted a significant CME gap formed over the weekend, between Friday's close around $84,445 and Monday’s open near $77,400. This gap is the largest created in this cycle and marks the biggest weekend move in many months. Daan Crypto suggested keeping an eye on the $84,000 level as a potential point of interest if the price crosses back over $80,000. Fellow analyst Titan of Crypto highlighted that after sweeping previous monthly and quarterly lows, BTC could rebound toward the first fair value gap (FVG) between $79,000 and $81,000, with the next area of interest being the second FVG between $84,000 and $88,000. An FVG occurs when the price moves rapidly, leaving a gap in a three-candle pattern, indicating an imbalance where no trading occurred.
Exchange order-book liquidity data from CoinGlass shows the price pinned below two sell-order clusters at $80,000 and just above $85,000. Bitcoin analyst AlphaBTC noted these strong liquidity levels, suggesting that a bounce at the start of February could potentially overcome these barriers, especially if the U.S. passes the Crypto bill. If the $80,000 level is breached, it could trigger a liquidation squeeze, forcing short sellers to close positions and driving prices toward $85,000, the next major liquidity cluster.
February’s first Bitcoin ETF inflows provide hope for a market recovery. Market analyst CoinBureau expressed optimism, noting that Bitcoin spot ETFs recorded $561.9 million in net inflows, ending four consecutive days of outflows. This inflow has already surpassed all of January's figures, indicating renewed demand. Analyst Danny Scott mentioned that institutions are "buying the fear," referring to the "extreme fear" currently gripping the market. Data from Santiment shows that Bitcoin's rebound to $78,300 from $74,600 followed a peak in fear, uncertainty, and doubt (FUD) levels, suggesting the potential for a relief rally. Cointelegraph also reported that the MVRV z-score has reached its lowest level ever, signaling "fire-sale valuations for Bitcoin" and hinting at a potential rebound in the near term.
