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Fresh Highs in BTC

Bitcoin is once again trading at fresh, record highs today after the leading cryptocurrency recovered from a 6% correction lower yesterday. Volatility around the latest US inflation report saw BTC futures briefly dipping lower to retest the broken prior highs around 69355. However, the level held as support and despite US inflation coming in above forecasts, and a subsequent USD rally, BTC regained composure and is now attempting a fresh breakout today.  
 

BTC Focus Moving Away from USD/Fed

In recent years Bitcoin has begun trading more like a typical risk asset. However, the current price action in Bitcoin suggests that the focus is moving away from drivers such as the Fed and the US Dollar and is now becoming more crypto-centric again. Essentially, positive sentiment is driving Bitcoin higher here which, to some, might be the warning sign for a potential bubble. However, if we breakdown some of the current backdrop there is plenty of substance to keep BTC supported here.
 

Factors Driving BTC Buying

Firstly, the continued surge in institutional demand for spot-Bitcoin ETFs is helping keep BTC well bid. With US funds now having taken in more than $10 billion since they began trading in January, and with a record $2.7 billion coming in this week alone, there is plenty of bullish order-flow to work through. Secondly, news that the UK will welcome similar Bitcoin ECNs from next month is adding to this atmosphere of demand as more institutional investors gain access to the crypto market. Thirdly, the upcoming Bitcoin halving event in April is also keeping bullish optimism well primed. With prior halving events seen leading to sizeable rallies, BTC bulls are hoping for a similar outcome next month.
 

Technical Views

BTC

The retest of the broken 69355 highs has seen fresh buying kicking in to take price back up through YTD highs. While this level holds, the focus is on a continuation higher with the channel highs the next target for bulls. Worth noting the bearish divergence we’re seeing in momentum studies currently meaning traders should be wary for any fresh corrections lower.

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