Bitcoin price rose as high as $71,954 on May 20, its highest in 38 days, on-chain data trends highlight lingering reactions to recent US macroeconomic indices and impending Ethereum ETF approval as key catalyst behind the rally.
Why is Bitcoin (BTC) price up today?
Bitcoin price surged to a 38-day peak of $71,954, on May 21, 2024, largely due to a reports from Bloomberg analysts that the US Securities and Exchange Comission is set to approve Ethereum ETF.
After a volatile start to the month, Bitcoin price fell as low as $60,207 on May 11. But since then the crypto market has flipped bullish thanks to a successive bullish whispers emerging from US regulators, ranging from the US Non-Farm Payrolls, to the latest Consumer Price Index (CPI) data.
Since Bloomberg Sr. ETF Analyst, Eric Balchunas statement on Monday afternoon that ETH spot ETF approval chances are now 75%, Bitcoin price surged 9% from $66,859 to $71,934 before finding support around the $71,000 level at the time of writing on May 20.
$1.8 Billion Decline in Exchange Reserves Could Drive BTC Toward $75k
Undoubtedly, bullish tailwinds from the positive sentiment surrounding Ethereum ETF approval is pivotal to the latest wave of the BTC price rally.
However, on-chain data suggests a continuation of the bullish accumulation trend that began shortly after the latest US CPI data release.
CryptoQuant Exchange Reserves chart below shows the real-time changes balance of all bitcoins deposited in exchange-hosted wallets. Declining Exchange Reserves occur when majority of Bitcoin holders are bullish, and are opting to shift their holdings into long-term storage.
On May 15, the US labor of Bureau Statistics announced that the US core inflation declined to 3.4% in April 2024. The BTC exchange reserves (blue) trend line above shows how Bitcoin investors reaction to the dovish US CPI report may have contributed to the 9% BTC price breakout in the last 48 hours.
Bitcoin investors held a total of 1,946,808 BTC as of May 15, when the cooler-than-expected CPI data was released. But since then there has been a clear trend of investors shifting large amount of BTC into long-term storage.
At the time of publication on May 21, the total bitcoin deposited on exchanges and trading platforms has now dropped to 1,919,030 BTC. This implies that investors have removed 27,778 BTC (worth approximately $1.96 billion) from the supply of coins readily available to be traded on exchanges.
When such a large number of coins are removed from the market supply, it signals bullish sentiment among holders, and it also increases the odds of a price breakout, if it coincides with a demand surge.
This partly explains why BTC price rapidly jumped 9% within just 12-hours, after Bloomberg analysts announced the likelihood of Ethereum ETFs approval by the SEC.
Bitcoin Price Forecast: Imminent Breakout above $75k?
Bitcoin price looks set for another leg-up after the 9% surge recorded in the 24-hour timeframe. With BTC exchange reserves still trending lower than last month’s bottom, there’s a chance that an official positive verdict from the SEC could spark another breakout above $75,000 in the days ahead.
IntoTheBlock’s global in/out of the money price data also affirms this bullish stance.
It shows that at the current prices, 98.7% of all active Bitcoin holders are in profit. Hence majority of BTC traders could be unwilling to sell, at least, until the SEC’s verdict on Ethereum ETFs expected before the May 23/24 deadline.
If this scenario holds, BTC will likely consolidate the $68,900 support level, where over 1.45 million investors had previously acquired over 954,500 BTC.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
