10x Research: BTC Trend Entering Critical Phase, This Indicator Could Help Break New Highs

Author: 10xResearch
Translation: Wenser, Odaily Planet Daily
Editor’s note: After the breakthrough of Ethereum futures ETF, the market has once again entered a bullish sentiment cycle. At the same time, as the funds for Bitcoin futures ETF continue to grow, when will the Bitcoin price break the previous high set in March and become the focus of attention once again. This article summarizes the key indicators shared by 10xResearch on the Bitcoin price breaking new highs for reference by readers. (Note: This article is only for the sharing of 10xResearch’s views and does not constitute investment advice.) Key Indicators of Bitcoin Price Surge
For most people, the rise and fall of Bitcoin prices seem to be random fluctuations that cannot be predicted. However, 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 point and subsequent direction of Bitcoin prices. Bitcoin prices performed slightly weakly in January this year and then soared in March, but in the past two months, they have entered a consolidation phase. This is not a coincidence. The key turning point for Bitcoin has arrived.
Two weeks ago, the trend of Bitcoin entered a key turning period.
The trading volume of retail investors (measured by 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 fall into the greedy emotion of FOMO (fear of missing out). We are confident that Bitcoin will soon reach a new all-time high, and this report and 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 futures ETF inflows. Although this analysis does not cover several smaller data points, it has sorted out most of the sources of funds.
Next, 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 (up or down) of Bitcoin prices. Bitcoin and various fund flows (stablecoins, ETFs, futures leverage)
Since Bitcoin’s halving on April 20th, the inflow of stablecoins has slowed significantly. After the halving, Tether, the issuer of USDT, completed a $2.7 billion inflow, while Circle, the issuer of USDC, completed a $500 million outflow. In comparison, Tether has accumulated a total of $20.1 billion in inflows from the beginning of the year to the present.
When the Bitcoin futures ETF started trading on January 11th, we saw a net inflow of $611 million in ETF funds, and the trading volume of the first day of Bitcoin futures ETF reached an astonishing $4.6 billion. Although stablecoin issuers have prepared billions of dollars for this, the purchasing trading 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 11th, with the CPI index reaching 3.4%, higher than the expected 3.2% and higher than the previous month’s record of 3.1%.
When the CPI index was announced on February 13th to be 3.1%, lower than the expected 3.4%, indicating a slowdown in inflation, the inflow of Bitcoin futures ETF funds gradually recovered. The inflow volume of ETF funds turned positive at the end of January, but it didn’t start to accelerate slightly until the CPI data was released on February 13th. However, when inflation rose again to 3.2% on March 12th, the inflow of Bitcoin ETF funds stopped immediately because the market ruled out the expectation of 2-3 interest rate cuts.


Bitcoin price trend and market sentiment in the past six months
In other words, 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 due to the influence of dovish Federal Reserve Chairman Powell’s speech on March 20th. He assured the market that the Fed expects to cut interest rates three times by 2024.
On April 10th, when the CPI exceeded the expected 3.4% and reached 3.5%, a similar situation occurred, and Bitcoin once again fell to $60,000, and the price dropped to around $56,500 on April 30th when the Hong Kong ETF funds flowed weakly.
Following the same pattern, on May 1st, Federal Reserve Chairman Powell “took action” again during the FOMC meeting, halting the downward trend of Bitcoin.
On May 15th, the CPI report met the expected 3.4% (lower than the previous month’s 3.5%), and Bitcoin rebounded accordingly. More importantly, the inflow of Bitcoin futures ETF funds resumed. If traders understand how Bitcoin reacts to the CPI, they should have confidence in trading in the opposite direction of the previous month’s CPI index.
From March 12th when the CPI rose to 3.2% to May 15th (about 46 days in total), when the CPI data matched the market’s prediction of 3.4%, the purchase funds of Bitcoin futures ETF were only $1 billion; since May 15th, we have seen a continuous inflow of about $1.5 billion for 7 consecutive days. Next key timing: June 12th
Since the next release of CPI data is scheduled for June 12th, we expect that the inflow of Bitcoin futures ETF funds may remain strong in the next two weeks, which should help Bitcoin reach a new all-time high.
When the market expected the inflation on May 15th to rise disappointingly again, our model predicted a slight decline in Bitcoin prices. When we model inflation for the next two months, we may see inflation hovering at the current level and soon entering a downward trend. And if the inflation index reaches 3.3% or lower, the Bitcoin price is expected to set a new all-time high.
This will continue to provide “certain impetus” for Bitcoin futures ETF investors to allocate Bitcoin and support Bitcoin prices.
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 decline.