09.02.202417:32 Forex Analysis & Reviews: Bitcoin is heading into a bullish run

Bitcoin is soaring toward its monthly high as the anticipated halving in April approaches and capital flows into new specialized exchange-traded funds (ETFs). The high volatility of BTC/USD and the rise in global risk appetite, marked by the ninth record closing of the S&P 500 in 2024, favor the bulls.

Bitcoin and Stock Market Volatility

After the approval of ten ETFs with bitcoin as the underlying asset by the Securities and Exchange Commission, the cryptocurrency sector's leader resumed its upward trend. Capital inflow into new specialized exchange-traded funds reached $8 billion on a net basis, with outflows from the Grayscale ETF practically dropping to zero, estimated at $6 billion. According to Orbit Markets, bitcoin has renewed its rally because the outflow of grayscale shades has finally diminished. The imminent halving is expected to drive the BTC/USD quotes up to $50,000.

The halving, which occurs every four years and is a natural process limiting the number of bitcoins to 21 million tokens, forces miners to sell their reserves. In 2024, the halving will take place in April, reducing the reward from 6.25 to 3.125 coins per block. To sustain their business, including new equipment, miners are compelled to reduce reserves. According to CryptoQuant, reserves have fallen from 8,400 tokens since the beginning of the year to 1.8 million, the lowest since June 2021. Given the current bullish market sentiment in the cryptocurrency market, buyers easily find bitcoins for sale, leading to the rise of BTC/USD quotes.

Miners' Token Reserves Dynamics

DBS Bank notes that previous halving events led to prolonged bullish runs for bitcoin. There is a substantial economic reason why prices should rise. As mining rewards decrease, the cost of production increases, reducing supply. Against the backdrop of steadily high or growing demand for tokens, BTC/USD quotes must rise.

Capital inflows into ETFs and the halving as the main bullish drivers of the cryptocurrency market are accompanied by a favorable external background. Bitcoin and other digital assets are inherently risky. However, the growth in risk appetite, indicated by the rally in U.S. stock market indices, contributes to the increase in BTC/USD quotes. In this regard, the ninth record high of the S&P 500 in 2024 is a strong argument in favor of token purchases.

Technically, the rapid divergence of BTC/USD from its fair value on the daily chart indicates a strong bullish impulse. Long positions initiated from 43,715 bitcoin levels should be maintained and periodically increased on pullbacks. Initial targets include pivot levels at 48,220, 48,620, and 49,100.