10x Research: BTC’s Trend Enters Crucial Period, This Indicator May Help Break New Highs

Author: 10xResearch
Translation: Wenser, Odaily Planet Daily
Editor’s Note: After the breakthrough in Ethereum spot ETF, the market has once again entered a bullish sentiment cycle. At the same time, as the funds for Bitcoin spot ETF continue to grow, when will the price of Bitcoin break through the previous high in March and become the focus of attention again. This article summarizes the key indicators shared by 10xResearch on Bitcoin’s price breaking new highs for readers’ reference. (Note: This article is only the viewpoint shared by 10xResearch and does not constitute investment advice.) Key indicators of Bitcoin price increase
For most people, the rise and fall of Bitcoin prices seem to be random fluctuations that cannot be predicted, but we want to point out the key driving factors of Bitcoin prices. If we have a correct understanding of these factors, we can relatively accurately judge the turning points and subsequent trends of Bitcoin prices. Bitcoin prices performed slightly weak in January this year, and then soared all the way in March, but in the past two months, they have entered a consolidation phase, which is not a coincidence. The key turning point of Bitcoin has come
Two weeks ago, Bitcoin’s trends entered a critical turning point.
The retail trading volume (measured in the Korean market) has been weak, indicating that retail investors do not understand what is happening in the Bitcoin market, and they are likely to be caught in the greed of FOMO (fear of missing out). We are confident that Bitcoin will soon reach a new all-time high, and this report, as well as more information afterwards, will help us convince readers that this is indeed the case.
Since the beginning of the year, about $54.6 billion has flowed into the cryptocurrency market, including $25.6 billion in stablecoins, $15.5 billion in perpetual futures leverage funds, and $13.5 billion in Bitcoin spot ETF inflows. Although this analysis does not cover several smaller data points, it has sorted out most of the sources of funds.
Below, we will show you when these fund flows will stop, when they will recover, and whether they will continue. This information will be crucial in determining the trend (upward or downward) of Bitcoin prices. Bitcoin and various fund flows (stablecoins, ETFs, futures leverage)
Since Bitcoin’s halving on April 20, the inflow of stablecoins has slowed significantly. After the halving, Tether, the issuer of USDT, completed an inflow of $2.7 billion on its own, while Circle, the issuer of USDC, completed an outflow of $500 million. In comparison, Tether has accumulated $20.1 billion in inflows from the beginning of the year to the present.
When the Bitcoin spot ETF started trading on January 11, we saw a net inflow of $611 million in ETF funds, with a staggering trading volume of $4.6 billion on the first day of Bitcoin spot ETF. Although stablecoin issuers have prepared billions of dollars for this, the purchasing volume in January was disappointing.
Part of the disappointment came from the large outflow of Grayscale’s GBTC ETF, but the main reason was the unexpectedly high inflation on January 11, with the CPI index reaching 3.4%, higher than the expected 3.2% and higher than the 3.1% recorded last month.
When the CPI index was announced to be 3.1% on February 13, lower than the expected 3.4%, indicating a slowdown in inflation, the inflow of funds for Bitcoin spot ETF gradually recovered. The inflow of ETF funds turned from negative to positive at the end of January, but it did not start to accelerate slightly until the CPI data was released on February 13. However, when inflation rose to 3.2% again on March 12, the inflow of Bitcoin ETF funds immediately stopped because the market ruled out expectations of 2-3 interest rate cuts.


Bitcoin price trend and market sentiment in the past half year
In other words, (to some extent) Bitcoin changes direction based on whether the CPI is higher than the previous month (bearish if the CPI is high, bullish if the CPI is low).
As a result, the price of Bitcoin gradually fell from around $73,000 to around $60,000, and the downward trend finally slowed down influenced by the dovish remarks made by Fed Chairman Powell on March 20. He assured the market that the Fed expects to cut interest rates three times by 2024.
On April 10, when the CPI exceeded the expected 3.4% and reached 3.5%, a similar situation occurred, and Bitcoin fell again to $60,000, and then dropped to around $56,500 on April 30 when the ETF funds flow in Hong Kong was weak.
In a typical move, Fed Chairman Powell “took action” again at the FOMC meeting on May 1, stopping the downward trend of Bitcoin.
On May 15, when the CPI report reached the expected 3.4% (lower than the 3.5% of the previous month), Bitcoin rebounded accordingly. More importantly, the inflow of funds for Bitcoin spot ETF has resumed. If traders understand how Bitcoin reacts to the CPI, they should have the confidence to trade in the opposite direction of the previous month’s CPI index.
From March 12, when the CPI rose to 3.2%, to May 15 (about 46 days in total), when the CPI data matched the market’s forecast of 3.4%, the purchase funds for Bitcoin spot ETF were only $1 billion; since May 15, we have seen continuous inflows of about $1.5 billion for 7 consecutive days. Next key time point: June 12
Since the next release of CPI data is scheduled for June 12, we expect that the inflow of funds for Bitcoin spot ETF may remain strong in the next two weeks, which should help Bitcoin reach a new all-time high.
When the market expected that inflation on May 15 would rise disappointingly again, our model predicted a slight decline in the price of Bitcoin. When we model inflation for the next two months, we may see inflation hovering at the current level and soon entering a downward trend. If the inflation index reaches 3.3% or lower, the price of Bitcoin is expected to reach a new all-time high.
This will continue to provide “certain motivation” for Bitcoin spot ETF investors to allocate Bitcoin and support the price of Bitcoin.
According to our model’s speculation, inflation will gradually no longer be a problem. It will not only become a moderate strength factor, but also likely become a strong factor as time enters the end of summer-because according to the predicted results of the model, inflation will gradually decrease.