Bitcoin Eyes $74K on Soft Inflation, Institutional Buys Surge

Bitcoin surges past $66,000, with traders eyeing $74,000 as selling pressure eases and institutional interest grows.

By Bill Bullington

5/16, 08:16 EDT
Bitcoin / U.S. dollar

Key Takeaway

  • Bitcoin's price could reach $74,000 due to soft inflation figures and growing institutional demand, with significant buying in BTC Calls for Dec 2024.
  • Millennium and Schonfeld have invested 3% and 2% of their AUM into BTC spot ETFs, indicating strong institutional interest.
  • Selling pressure on bitcoin eases as short-term holders sell at zero profit and Bitcoin balances at OTC desks stabilize.

Bitcoin's Bullish Breakout

Following the release of softer-than-expected U.S. inflation data, Bitcoin (BTC) has seen a significant surge, breaking past the $66,000 mark for the first time since April 24. This rally, which saw Bitcoin posting its biggest single-day gain since March, was largely fueled by the U.S. Consumer Price Index (CPI) for April rising only 0.3% versus the expected 0.4%. Singapore-based QCP Capital noted this as a trigger for bullish sentiment towards riskier assets, including cryptocurrencies. They predict that this momentum could propel Bitcoin prices toward the $74,000 mark in the coming days, especially as institutional demand continues to grow. Notably, large asset managers like Millennium and Schonfeld have invested approximately 3% and 2% of their AUM into the BTC spot ETF, indicating a growing institutional interest in Bitcoin.

Institutional Demand and Market Sentiment

The increasing institutional demand for Bitcoin is underscored by filings showing big-name funds such as Millennium Management and Elliot Capital holding millions worth of Bitcoin ETFs in their portfolios. This institutional interest is a significant factor contributing to the bullish market sentiment. Additionally, QCP Capital reported sizeable buyers of $100K-$120k BTC Calls for December 2024, further indicating confidence in Bitcoin's long-term price increase. On the other hand, CryptoQuant analysts have observed that the selling pressure on Bitcoin appears to have eased off, with short-term Bitcoin holders selling at basically zero profit and Bitcoin balances at OTC desks stabilizing. This suggests a decrease in Bitcoin supply coming into the market to sell, potentially easing downward pressure on prices.

Broader Market Rally and Future Predictions

The crypto market's rally was not isolated to Bitcoin. Other major cryptocurrencies like Solana (SOL) and Near Protocol (NEAR) also posted significant gains, with increases of 8% and 12%, respectively. This broader market rally is reflected in the CoinDesk 20 Index (CD20), which was up by 6%. Analysts are now predicting that Bitcoin's breakout could lead to a rally towards $69,000 and potentially new highs around $84,000 as altcoins follow suit. This optimistic outlook is supported by the Federal Reserve's dovish stance and the recent decrease in CPI inflation, which has been interpreted by investors as a bullish regime shift for risk assets, including cryptocurrencies.

Street Views

  • QCP Capital (Bullish on Bitcoin):

    "We expect bullish momentum here that could take us back to the highs of nearly $74,000. The desk saw sizeable buyers of $100K-$120k BTC Calls for Dec 2024 on this move higher in spot."

  • CryptoQuant Analysts (Neutral on Bitcoin's short-term outlook):

    "Short-term Bitcoin holders are selling at basically zero profit and traders are depleting their unrealized profits in the last few months... Bitcoin balances at OTC desks stabilizing, which suggests there is less Bitcoin supply coming into the market to sell via these entities."