Key Points
- Bitcoin exchange inflows are at their lowest levels of the year, indicating long-term gains anticipation.
- China’s liquidity stimulus and reduced futures market volatility suggest Bitcoin’s potential to reach $77K.
Bitcoin’s Growing Appeal
The interest in Bitcoin (BTC) from investors, including those in traditional finance, is growing. Unlike in the past, Bitcoin is now often stored in cold wallets for the long term, indicating strong investor confidence.
As Q4 begins, Bitcoin exchange inflows have reached their lowest levels this year. This suggests that investors and institutions are anticipating long-term gains for BTC, as its market cap continues to grow due to widespread adoption.
Impact of China’s Liquidity Stimulus
Chinese stocks are outperforming global markets, largely due to a government stimulus package that has provided significant liquidity. This increase in liquidity is impacting risk-on assets like BTC, which has historically shown a strong correlation with Chinese stock performance.
Following the People’s Bank of China’s largest stimulus since the pandemic in late September, Chinese internet stocks have increased in value by $2 trillion. This surge in Chinese stocks is viewed by many traders as a potential signal for a similar upward movement in Bitcoin.
In addition to the liquidity stimulus, last week saw the largest divergence between crypto and cash-margined Bitcoin futures open interest. More traders are now using cash to back their leveraged positions, rather than Bitcoin itself. This shift is a positive, as cash margins reduce volatility and the risk of forced liquidations, creating a more stable trading environment.
Meanwhile, retail traders continue to chase high-leverage gains, contributing to the market’s volatility. This divergence between institutional caution and retail enthusiasm highlights a maturing Bitcoin market, where long-term sustainable growth is increasingly driven by institutional activity.
Bitcoin’s Potential to Reach $77K
The Volatility Adjusted Power Law Index projects BTC’s fair price at $77K, considering long-term growth and volatility. Despite price consolidation around $60K, the fair price has risen from $70K to $77K in the past month.
Increasing liquidity from China’s stimulus and reduced futures market volatility suggest Bitcoin is gaining momentum for a breakout. Bitcoin appears ready to break higher, with potential to reach $77K as Q4 progresses.
With global liquidity surging, BTC reaching $77K seems more realistic. This is especially true if economic conditions and institutional support drive growth.