Gustavo Faria2024-07-15

Bitcoin Returns Above $63k: What's Driving This Surge?

In the past 2 days, Bitcoin has surged back above $60k. Here are the key factors behind this move. ### Inflation Data On Friday, U.S. CPI inflation data came in at 3.0% year-over-year, slightly below the expected 3.1%. This lower-than-expected inflation figure has bolstered investor sentiment and triggered a risk-on environment, benefiting the crypto market. ### ETF Inflows ETF inflows highlight growing investor optimism about a soft landing. Approximately $310 million in net inflows were recorded on Friday, contributing to a total of $1.04 billion for the week. ### German Government BTC Distribution The German government completed the distribution of its ~50k BTC holdings, which had been causing FUD in the market. This sell-off had been a source of concern, similar to when LUNA sold around 80k BTC, leading to a price drop from $45k to $25k. However, this cycle, the market has shown much greater resilience. ### Market Structure The recent recovery appears to have been driven primarily by spot market purchases. The Spot CVD has returned to positive territory, indicating healthy buying activity. There were no significant short position liquidations during this move, and funding rates for perpetual contracts remain neutral. This creates a much healthier price structure for Bitcoin to continue consolidating above the current range. ### Reaction to Political Events We must also comment on the market's reaction following the assassination attempt on U.S. presidential candidate Donald Trump. The market underscored on Saturday that it has a favored side in the U.S. elections. - once it was confirmed that the candidate was unharmed, it became clear that this incident has strengthened his position in the electoral race. Subsequently, increased buying volume entered the market, pushing Bitcoin's price up by approximately 4% in the following hours.