Bitcoin Rally Reflects Buyer Conviction On Coinbase Spot Markets, Bull Run Back On?

Bitcoin (BTC) climbed above $97,000 on Wednesday, marking a two-month high as spot Bitcoin exchange-traded funds (ETFs) attracted significant inflows. The surge in demand reflects growing institutional and retail investor confidence in the digital asset, with inflows reversing earlier outflows seen at the start of January. The rally has also led to a shift in sentiment, as the Crypto Fear & Greed Index moved into 'greed' territory for the first time since October.

Spot Bitcoin ETFs have drawn over $1.7 billion in inflows over three consecutive days, including a single-day record of $843.6 million on Wednesday according to data. BlackRock’s iShares Bitcoin ETF (IBIT) led the inflow wave, with $648 million entering the fund. Other major contributors included Fidelity’s Wise Origin Bitcoin Fund (FBTC) and ARK Invest’s ARK 21Shares Bitcoin ETF (ARKB) as reported.

The inflows have helped offset earlier outflows of approximately $1.4 billion between January 6 and 9, indicating a potential turning point in investor behavior. This reversal comes as Bitcoin’s price rebounded from mid-November lows, with the asset now trading near $96,642 at the time of publication according to market data.

Why Did This Happen?

Analysts point to strong spot demand on Coinbase as a key driver of the recent Bitcoin rally. Data suggests that the price increase is backed by direct purchases rather than leveraged positions in derivatives markets, which is seen as a healthier and more sustainable type of buying. This is supported by metrics such as the Adjusted Coinbase Premium and Cumulative Volume Delta (CVD), which show steady accumulation of BTC.

Institutional buyers are also showing renewed interest, with the Digital Asset Market CLARITY Act expected to be discussed on January 15 in the Senate Banking Committee. The bill could provide clearer regulatory guidance, potentially attracting more institutional capital to the space. Meanwhile, MicroStrategy continued its Bitcoin accumulation strategy, increasing its holdings by 13,627 BTC in early January.

How Did Markets React?

Bitcoin’s surge has led to increased short liquidations, with more than $290 million in Bitcoin short positions being liquidated in 24 hours. The short squeeze has been the largest since early October, with Bitcoin accounting for the largest share of liquidations. The rally has also pushed the broader crypto market capitalization above $3.3 trillion.

Ethereum (ETH) and Ripple (XRP) have also benefited from the inflow of capital, with Ethereum ETFs seeing $175 million in inflows on Wednesday. However, Bitcoin and other major cryptocurrencies have started to pull back from recent highs as profit-taking sets in.

What Are Analysts Watching Next?

Many analysts believe Bitcoin could target the psychological $100,000 level, with some suggesting that the bull market is just beginning according to market forecasts. According to Polymarket data, Bitcoin has a 51% chance of reclaiming $100,000 by February 1 and a 23% chance of reaching $105,000 as reported.

The market is also closely watching the outcome of the Senate Banking Committee’s discussion on the Digital Asset Market CLARITY Act. The bill’s potential impact on stablecoin rewards, government officials’ crypto activities, and DeFi regulations could shape the next phase of the bull run.

Bitcoin’s rally has also been influenced by broader macroeconomic factors, including the criminal investigation into Federal Reserve Chair Jerome Powell. The investigation has raised questions about the central bank's independence and could affect investor expectations for monetary policy.

As Bitcoin continues to climb, investors are monitoring key technical levels, including the 50-week moving average around $101,420 as market analysis indicates. The ability of Bitcoin to maintain its current momentum will be a critical indicator of whether the bull run is gaining lasting strength or if further consolidation is needed before a major breakout occurs.