Bitcoin pro traders were unmoved by BTC’s sell-off, data points to new price highs. BTC supply Low
The newly launched spot Bitcoin BTC $70,918
exchange-traded funds (ETFs) experienced their first week of net outflows from March 18 to March 22. A total of $888 million was withdrawn from the spot ETFs, marking a significant shift from the previous week's $2.57 billion inflow. This has led to speculation about the sustainability of Bitcoin's rally to $70,000 on March 25.Bitcoin can rally in the absence of spot BTC ETF inflows
Some market participants had argued that institutional inflows were a key driver behind Bitcoin's all-time high of $73,755 on March 14, casting doubt on the 9% gains seen between March 23 and March 25. Further raising concerns is the fact that this rally occurred while the S&P 500 index was unable to maintain its all-time high of 5,260 set on March 21.
Source: venturefoundΞr
Analyst venturefoundΞr, on March 20, suggested that Bitcoin was facing a reality check after FOMO from ETF investors drove it to a new high before the halving, effectively "trapping" those who bought at the peak. While a 15% gain from March 20 to March 25 shouldn't dismiss bearish concerns outright, Bitcoin's market behavior suggests that its bullish momentum isn't solely reliant on spot ETF inflows.
Some traders believe that the recent approval of a $1.2 trillion spending package by the United States on March 23 serves as a key positive catalyst for Bitcoin. This is particularly true in light of the U.S. Federal Reserve's forecast model predicting three interest rate cuts throughout 2024. With the U.S. deficit expected to reach $1.6 trillion in 2024, the pressure on government debt repayment intensifies as interest rates hover above 5.25%.
The concurrent rise to all-time highs of scarce assets like gold, Bitcoin, real estate, and the stock market suggests a weakening U.S. dollar. Ultimately, the performance of the North American currency against the euro and the British pound is less relevant as investors seek refuge from fiat currency devaluation.
Concluding that Bitcoin's price will continue its upward trajectory due to monetary expansion might seem premature. However, bears arguing that the U.S. fiscal trajectory will lead to a recession—which could negatively affect risk-on assets—miss a crucial point: Bitcoin's price has already surged 64% year-to-date in 2024, leaving those waiting for a dip behind.
Bitcoin derivatives held firm during the dip below $62,000
To gauge whether professional traders have become more pessimistic about Bitcoin following the disappointing spot ETF inflow data, one should examine the BTC monthly futures contracts. In neutral markets, these contracts typically command a premium of 5% to 10%, accounting for their longer settlement period.
Bitcoin 3-month futures annualized premium. Source: Laevitas.ch
Data indicates that the annualized BTC futures premium was largely unaffected by the net spot ETF outflows. Currently, an 18% level is viewed as optimistic, suggesting buyers are willing to pay a premium to open leveraged long positions.
Examining the Bitcoin options market is crucial to determine if the March rally to $70,000 has increased the demand for strategies to hedge against potential price corrections. Typically, if traders expect a Bitcoin price drop, the skew metric will exceed 7%, whereas periods of enthusiasm often show a skew below 7%
Bitcoin 2-month options 25% delta skew. Source: Laevitas.ch
Since March 13, the BTC options 25% delta skew has remained in a neutral range, indicating a balanced demand for bullish and bearish options strategies. Notably, there were no signs of panic as Bitcoin tested the $62,000 support on March 20.
The indicators from Bitcoin derivatives markets suggest a strong price resilience despite the recent spot ETF outflows, supporting the likelihood that the $70,000 support level is gaining strength.
BTC supply on Coinbase hits nine-year low
Bitcoin reclaimed the $70,000 mark at 4:47 pm UTC for the first time since March 15, according to CoinMarketCap data.
BTC/USDT, 30-minute chart. Source: CoinMarketCap
On the supply side, Bitcoin reserves on Coinbase reached a nine-year low of 344,856 BTC on March 18, showing that investors have resumed accumulating BTC off exchanges.
The last time BTC reserves on Coinbase were at similar lows was in 2015, according to data provider Glassnode.
Bitcoin balance on Coinbase. Source: Glassnode
The total Bitcoin balance in accumulation addresses has also rebounded to over 3.2 million BTC, nearing a record high, according to Glassnode’s chart.
In this case, accumulation addresses are those with over 10 BTC and no outgoing transactions or ties to centralized exchanges and mining firms.
BTC total balance in accumulation addresses, Source: Glassnode
Further showcasing the growing accumulation pattern, Bitcoin inflows to accumulation addresses hit a new all-time high of 25,300 BTC on March 22, according to an X post by verified CryptoQuant author IT Tech.
This suggests that big investors are likely betting on more upside after the recent 15%–20% drawdown from the all-time high of around $74,000.
BTC inflows to accumulation addresses. Source: IT Tech
In total, Bitcoin reserves on all exchanges hit a three-year low of 1.92 million BTC on March 25, according to data by CryptoQuant. In other words, the price of Bitcoin may still have more room to run, with BTC supply on exchanges at historic lows and demand from exchange-traded funds (ETFs) already attracting billions in inflows. 
Bitcoin exchange reserves, all exchanges. Source: CryptoQuant
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.
