ETFs buy 3X new BTC supply — 5 Things to know in Bitcoin this week

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Bitcoin (BTC) starts a new week in fighting form as $67,000 returns with TradFi markets.

The largest cryptocurrency is edging closer to a rematch with final resistance around all-time highs past and present — at $69,000 and $73,800.

Whether it gets there in the coming days is the main preoccupation facing market participants, and various factors could contribute to bullish continuation.

These include cues from United States economic policy as the Federal Reserve releases minutes from its May meeting, while U.S. unemployment data is also waiting in the wings.

When it comes to BTC price action, traders are getting ever more confident that a local bottom has come and that upside is what should result after two months of consolidation.

Meanwhile, a refreshing divergence may be playing out — prices are higher, but sentiment is lingering around lower levels than during the March peak.

Could a more sustainable journey to price discovery be on the cards?

Against this backdrop, Cointelegraph takes a closer look at the issues surrounding Bitcoin markets this week.

Bitcoin bulls keep up pressure below all-time highs

Bitcoin certainly feels back in business this week, returning to near $67,000 into the Asia session after briefly dipping into the weekly close, data from Cointelegraph Markets Pro and TradingView shows.

That brief spate of weakness accompanied geopolitical uncertainty from Iran, but markets soon forgot this as BTC/USD preserved its 10% May gains.

The latest data from monitoring resource CoinGlass now shows that the bulk of immediate overhead resistance lies just below $68,000.

BTC liquidation heatmap (screenshot). Source: CoinGlass

Additional data shared to X (formerly Twitter) by IT Tech, a contributor to on-chain analytics platform CryptoQuant, shows liquidation levels surrounding spot price.

BTC liquidation levels. Source: IT Tech/X

Commenting on the latest BTC price action, market participants were in a positive mood.

“Beauty of a BTC weekly close. First Bullish engulfing weekly since October 2023,” popular trader Crypto Damus noted.

Crypto Damus referred to last week’s candle erasing previous losses to close at $66,210.

BTC/USD 1-week chart. Source: TradingView

Michaël van de Poppe, founder and CEO of trading firm MNTrading, reiterated his thoughts regarding a steady trek toward new highs for Bitcoin.

“Bitcoin is likely going to continue to be moving in this range. I’m not expecting massive volatility to come,” he told X subscribers over the weekend.

“I’d rather expect consolidation and slow upwards movements towards the all-time high.”

Crypto total market cap chart. Source: Michaël van de Poppe/X

Van de Poppe nonetheless added that expected altcoins to “outperform” while this was happening, these having suffered more acutely during Bitcoin’s consolidation phase.

“Slow upwards grind, slowly but surely accelerating towards a vertical move in Q3/Q4,” a further post predicted.

As Cointelegraph reported, however, not everyone shares these views. At the weekend, trader and commentator Credible Crypto revealed a belief that $60,000 or even lower should come next for BTC/USD.

U.S. jobs data, Fed headline macro week

The macro landscape — in contrast to last week — is not dominated by U.S. economic reports in the coming days.

Instead, the Fed takes center stage in the form of a slew of speaking appearances from senior officials.

While Chair Jerome Powell is not due to be among them, markets nonetheless watch the language used by governors and others for cues as to future policy.

The minutes from the May meeting of the Federal Open Market Committee, where interest rates were discussed, are due for release on May 22.

Thereafter, U.S. jobless claims could provide another bout of volatility for risk assets, continuing a trend seen this month and before.

At the same time, attention is increasingly focusing on favorable liquidity conditions in both the U.S. and beyond.

In his latest X content, financial commentator Tedtalksmacro suggested that crypto bull run is “far from over” as a result.

Tedtalksmacro flagged an early liquidity cycle now beginning, along with M2 money supply displaying “plenty of room to the upside for easing liquidity conditions.”

“While liquidity is definitely back in crypto (BTC ETFs), the velocity of inflow has not yet seen a manic phase consistent with cycle tops,” he continued about crypto market trends.

U.S. M2 money supply. Source: Tedtalksmacro/X

Bitcoin ETFs preempt “new faith” in BTC

Tedtalksmacro touched on what could shape up to be a strong comeback from the U.S. spot Bitcoin exchange-traded funds (ETFs).

After struggling for weeks on end since Bitcoin’s all-time highs in March, the spot ETF products are seeing renewed interest. Last week, inflows hit almost $1 billion — the best weekly performance since that time.

“Expect these to only increase as price drifts higher and tradFi once again renew faith in the asset,” Tedtalksmacro concluded.

That ETF demand lies within a new landscape — Bitcoin’s block subsidy is half of what it was in March, and large inflows cause the ETF providers to purchase much more BTC than that which is added to the supply by miners daily.

“Bitcoin ETFs have purchased 21,700 BTC ($1.5B) in the month to date,” Thomas Fahrer, CEO of crypto reviews portal Apollo, revealed last week.

“This is 3X the supply of new bitcoin from miners.”

Bitcoin ETF net flows. Source: Thomas Fahrer/X

The U.S. spot ETFs alone now hold approximately 2.8% of the total BTC supply.

Bitcoin exchange reserves plummet to seven-year lows

When it comes to demand for Bitcoin, few statistics tell a more bullish story than exchange BTC reserves.

New data currently circulating on social media puts the amount of Bitcoin available for purchase on major trading platforms at the lowest since 2017.

This comes courtesy of CryptoQuant, which puts the tally at 1,918,417 BTC as of May 19. A year ago, this was around 400,000 BTC higher.

Exchange BTC reserves. Source: CryptoQuant

“Right on time for a second wave of ETF Flows,” Fahrer commented on the phenomenon, drawing attention to a combination of “demand shock” and “inelastic supply” going forward.

“In 2021, during the peak of the bull market, approximately 2.7 million Bitcoin were held in exchange reserves, with Bitcoin trading around $69,000. Three years later, the reserves have decreased to about 2 million Bitcoin, yet the trading prices are nearing historical highs,” CryptoQuant contributing analyst meanwhile wrote in one of its Quicktake market updates last week.

“The recent halving event has effectively cut the potential new supply from miners by half, significantly reducing the likelihood of new Bitcoin entering the market through sales. Given these dynamics, it becomes challenging to maintain a bearish stance on Bitcoin.”

Sustainable greed?

In what could become an encouraging sign for short-term market sentiment, the Crypto Fear & Greed Index is not rushing to extremes on the current BTC price move higher.

Related: Bitcoin preps ‘golden cross,’ which last sparked 170% BTC price gains

The Index, which uses a basket of factors to determine the sustainability of overall crypto sentiment, currently stands at 70/100.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

While “greedy,” this is so far devoid of the excessive levels seen during the trip to Bitcoin’s all-time highs in March, when it hit 90/100.

Analyzing the mood, research firm Santiment nonetheless determined the most bullish feeling on Bitcoin since January.

“The crowd’s sentiment has shifted toward Bitcoin after the surprise bounce above $66K Wednesday (and now above $67.2K),” part of an X post from May 17 reads.

Santiment added that “FOMO” on the part of buyers needs to stay low in order for the positive trend to continue.

Bitcoin, Chainlink sentiment analysis. Source: Santiment/X

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.