Bitcoin has traded in a narrow range between $62,000 and $65,000 for over two months, failing to break above the $70,000 resistance level. A recent report from crypto exchange Bitfinex identifies two of three conditions necessary for a BTC rally as already met: lower expected interest rates and loose financial conditions. The final missing piece is capital flow from equities, the tech sector, and AI markets into the crypto ecosystem. If that occurs, a significant price breakthrough may follow. Conversely, sustained negative flows could push Bitcoin to a lower support level around $57,000.
For over two months, bitcoin has struggled below $70,000, hovering around $62,000 to $65,000. Experts believe the broader macro market condition is moving in favor of the apex crypto.
Crypto exchange Bitfinex stated in its latest Alpha report that two of three conditions supporting a BTC rally have been met. The report outlined “lower expected rates and already-loose financial conditions” as the two conditions already fulfilled.
The inflation rate fell from 3.50% in June to 3.40% in July, partly due to falling energy prices. The Federal Reserve may not raise interest rates in the coming weeks, while short-term Treasury yields have dropped and the S&P 500 has soared.
Tech-focused hardware and AI infrastructure have created “a separate source of supply-driven inflation.” However, this capital has failed to flow into the crypto market.
The Bitfinex report claims that if capital flowing through equities, the tech sector, and AI markets enters the crypto ecosystem, a price surge for bitcoin will naturally follow. This is the third condition needed for a smooth rally.
Presently, capital flow through spot Bitcoin ETFs has decreased, losing around $385 million in weekly flow during the same week equities like the S&P 100 soared. Corporate Bitcoin treasuries have turned negative, with Strategy slowing its acquisitions and even selling some holdings in separate weeks this year.
Stablecoin supply has also reduced, staying below its May record. “In such a thin market, relatively small changes in flows could produce an outsized move in either direction,” Bitfinex explained. If capital flows favor crypto, BTC could again reach or surpass $70,000; prolonged negative flows could send it to a lower support level around $57,000.
