Bitcoin advances toward US$80,000 as ETF demand builds

Bitcoin surged approximately 23% last week, marking its largest weekly increase in over three years following a crash from a record above US$126,000 on October 6. Hong Kong: The cryptocurrency's rebound is gaining momentum as it approaches US$80,000, with the strongest weekly inflows into US spot ETFs in 10 months contributing to the evidence of a broadening rally.

The 13 US-listed funds attracted a net US$1.92 billion, the highest since early October last year, according to Bloomberg data. These funds also recorded their biggest single-day inflows in over three months, receiving US$606.3 million on August 20. This influx of capital comes as Bitcoin gained about 23% last week, its largest increase in over three years, trading around US$79,000 in New York.

The impressive rally was initially driven by US plans to boost buybacks of long-dated bonds to reduce yields and fueled by a short squeeze as traders had to close bearish positions. The surge in ETF inflows signals growing investor interest in Bitcoin. Gracie Lin, OKX SG's chief executive officer, stated that net inflows were observed on every trading day last week, hinting at renewed enthusiasm for the token.

However, the future of this momentum remains uncertain. Some profit-taking could be expected following Bitcoin's rapid ascent, according to Lin. The latest weekly ETF inflows were the largest since the cryptocurrency crashed from a record above US$126,000 on October 6 and entered a "crypto winter." This resurgence is significant as spot ETFs had experienced nearly US$390 million in net outflows the previous week, the most in six weeks.

BlackRock's iShares Bitcoin Trust contributed US$1.3 billion of last week's inflows. Despite these gains, over US$2.9 billion has been withdrawn from the ETFs this year. It remains to be seen whether Bitcoin's rally will lead to sustained demand and the start of a new bull market. Jayke Kyndrede, senior sales trader at market maker QCP Group, noted that while the market appears stretched near term, it is still well-supported.

He added that after such a swift move, consolidation or retracement would not be surprising, but the timing and depth remain unclear while demand remains robust.