Key Takeaways
What factors are driving Bitcoin’s recent bullish momentum?
Rising liquidity in China and institutional inflows into US spot ETFs are fueling Bitcoin’s uptrend.
What could limit Bitcoin’s rally in the short term despite positive indicators?
Heavy pressure on options selling and weakening retail sentiment could create resistance and slow momentum.
Bitcoin [BTC] has maintained bullish momentum over the past day, rising 1.28% to open a candle above $110,000 for the first time since October 12.
AMBCrypto analyzed the market to identify the key factors driving this momentum and what they could mean heading into the weekend.
China’s liquidity drive and institutional moves
Bitcoin’s recent rise appears to be linked to the growing M2 money supply in China.
The country’s M2 has continued to grow, rising 0.87% last month, while global liquidity fluctuated between $127 trillion and $128 trillion.
The rising liquidity indicates higher monetary circulation in the Chinese market, which could flow into assets such as Bitcoin.
The recent approval of a Solana [SOL] ETFs in Hong Kong could also signal a growing willingness among investors to deploy capital into digital assets, a move that China could soon repeat.
Source: Alpharactal
Institutional investors in the United States are also positioning themselves for the weekend.
Data shows that US spot Bitcoin ETFs saw inflows of $20 million this week, signaling renewed confidence. This is because US M2 supply remains flat, growing 0.0% over the same period.
Market indicators point to accumulation potential
On- and off-chain indicators suggest that Bitcoin’s bullish stance remains intact. The Short-Term Holder Net Unrealized Profit/Loss (STH-NUPL) metric shows that Bitcoin has entered a cooling phase, indicating investor discomfort.
Historically, such stress among short-term holders often precedes accumulation phases and eventual price recovery; a similar arrangement may now form.
Source: Glassnode
Bitcoin’s dominance is also up 1.57% in the past day, at the time of writing, reflecting renewed investor confidence.
Increasing dominance typically means investors reallocate money from altcoins to Bitcoin, strengthening its position and setting the stage for a potential rally if momentum continues.
Resistance ahead
Not all investors share the bullish sentiment. Data from the Bitcoin Options Net Premium Inflow shows heavy selling pressure between $109,000 and $115,000, BTC’s current trading range.
This indicates that traders are using options to hedge against possible price drops. As selling pressure increases, this zone can form strong resistance and weaken market confidence.
Source: Glassnode
As the week draws to a close, institutional traders are expected to withdraw from the market, leaving retail investors to determine whether Bitcoin’s bullish momentum will hold.
At the time of writing, retail participants appeared to be easing their purchasing activities show data they sold about $48 million worth of Bitcoin today.
Should retail sentiment remain bearish, Bitcoin’s chances of a near-term rally appear limited.