Bitcoin Surges 12% to $107,000 as Inflows to Exchanges Drop 61%

Bitcoin has recently reclaimed the $107,000 price level and major moving averages, indicating a potential surge towards $120,000. This optimism is driven by a significant drop in Bitcoin inflows to exchanges, suggesting that investors are less inclined to sell. The current inflow/outflow ratio mirrors levels observed at the beginning of the 2023 bull market, further supporting the bullish sentiment.

Bitcoin's recent price action has placed it back in the spotlight, trading just above $107,000. Analysts are optimistic about the cryptocurrency's potential to reach $120,000, citing falling inflows to exchanges, favorable macro conditions, and several bullish technical patterns. One of the strongest indicators of Bitcoin's upward movement is the data from Binance, which shows that the 30-day moving average of BTC inflows to the exchange has dropped to just 5,147 BTC. This is less than half the monthly average during previous bear markets, despite prices hovering above $105,000. In December 2024, when Bitcoin was trading below $100,000, the inflow rate was over 13,000 BTC. The low inflow levels coupled with higher prices indicate that fewer holders are looking to cash out, suggesting reduced selling pressure and rising investor sentiment.

According to Bitcoin researcher Axel Adler Jr., the current inflow/outflow ratio remains at a high level, similar to the end of 2023, which indicates strong demand for BTC. This shows that while coins may be moving in and out of exchanges, net outflows are still dominant, meaning investors are holding rather than selling. Historically, spikes in BTC inflows to exchanges have occurred during moments of panic or profit-taking. For instance, during the FTX collapse in late 2022, monthly inflows spiked to around 24,000 BTC due to fear-driven selling. The current low inflows despite high prices suggest a change in investor behavior, with many traders expecting more upside for the cryptocurrency.

Another key indicator is the 50-day exponential moving average (EMA). Bitcoin recently dipped below this line but quickly recovered, posting three consecutive daily closes above it. According to crypto trader Ibrahim Cosar, this kind of recovery has often preceded breakout rallies. Cosar believes this setup could push Bitcoin toward the $120,000 level. Technical indicators, such as the rising cumulative volume delta (CVD) spot indicator, also show strong demand for Bitcoin in the spot market, further supporting the bullish outlook.

Despite the optimism, there are risks to consider. Bitcoin is sensitive to geopolitical tensions and unexpected economic events, such as a surprise jump in inflation, which could spook markets and reverse Bitcoin's movement. Additionally, any downturn in spot demand, especially if mirrored by an increase in exchange inflows, could quickly reverse sentiment. While the reclaim of technical levels like the 50-day EMA is encouraging, it is important to remain cautious. Bitcoin's path toward $120,000 is gaining ground, but the road is rarely straight. For now, the bulls have the upper hand, and if the trend continues, Bitcoin could soon reach $120,000.