- Spot demand from ETFs and corporate buyers like Strategy sustains Bitcoin‘s bullish momentum.
- Low leverage among bulls minimizes the risk of cascading liquidations, even with a potential 5% price drop.
- Rising inflation hurting fixed-income returns may eventually trigger a capital rotation from Gold into Bitcoin.
Bitcoin faced a 7% pullback this week, retreating from near $76,000 as geopolitical tensions and hot inflation data rattled global markets. However, analysts see little evidence that the cryptocurrency’s core bullish trend has fundamentally broken.
The S&P 500 remains near record highs despite weak job market data and escalating conflict in the Middle East. Consequently, investor behavior does not yet signal outright panic, data shows odds for steady interest rates plunged to 42% this week. This macro backdrop increases pressure on traditional assets.
Sticky inflation and war risks have heightened investor aversion to speculation. Meanwhile, the adjusted return on 2-year Treasuries sits at 1.44%, a level not indicative of extreme market fear.
Bitcoin’s recent rally has been fueled by spot market demand rather than risky leverage. Current funding rate data shows bears are overconfident, paying to maintain short positions. A drop to $68,000 would trigger less than 1% of the total futures market open interest in liquidations.
Gold prices have shown signs of exhaustion after holding above $4,800 for a month. An eventual rotation from this safe-haven asset could provide fresh fuel for Bitcoin’s ascent. Overall, the fundamental drivers for a continued rally appear intact.
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