Bitcoin Reaches Highest Level of the Year
Bitcoin climbed beyond $96,000 during late Tuesday trading, marking its strongest price level so far this year and its best showing since November. The move capped a strong 24-hour rally of roughly 5%, with BTC briefly touching highs near $96,650 before easing slightly toward the $95,000 range.
The rebound extends a broader recovery that has been building since January, with momentum increasingly supported by institutional activity rather than retail speculation alone.
ETF Inflows Continue to Accelerate
Fresh data highlights the role of U.S. spot Bitcoin ETFs in fueling the latest price move. Combined net inflows topped $750 million in a single trading session, underscoring sustained demand from large investors.
Fidelity’s FBTC led the charge, recording more than $350 million in daily inflows and pushing its cumulative total beyond $12 billion. Bitwise’s BITB followed closely, attracting close to $160 million over the same period.
This pattern reinforces a growing trend: U.S.-based ETF demand is becoming a major driver of Bitcoin’s price action, increasingly capable of moving the market on its own.
Macro Factors Add to Market Sensitivity
Beyond ETFs, macroeconomic conditions remain in focus. U.S. inflation data for December met expectations, with annual CPI holding at 2.7%. The figures helped calm fears of renewed inflationary pressure tied to tariff policy changes.
At the same time, unresolved legal challenges surrounding Trump-era tariffs continue to inject uncertainty into broader markets, including crypto. While the administration has signaled contingency plans, traders remain cautious about near-term volatility.
Bitwise: ETF Demand Could Outrun Bitcoin Supply
Bitwise CIO Matt Hougan believes the long-term implications of ETF inflows are not yet fully reflected in Bitcoin’s price. In a recent market analysis, he compared Bitcoin’s structure to gold and highlighted the imbalance forming between new supply and ETF demand.
“Since ETFs debuted in Jan 2024, they’ve been buying more than 100% of the new supply of bitcoin. But the price hasn’t gone parabolic, because existing holders have been willing to sell. If ETF demand persists, and I think it will eventually, these sellers will run out of ammo.”
According to Hougan, ETFs have so far absorbed more Bitcoin than the network produces, but long-term holders have helped stabilize prices by selling into rallies. If that selling pressure fades while ETF demand remains strong, the market could face a genuine supply squeeze.
Short Sellers Caught Off Guard
The latest surge also blindsided bearish traders. As Bitcoin moved higher, short positions were rapidly unwound, leading to roughly $688 million in liquidations over a 24-hour period, based on derivatives market data.
The scale of the squeeze suggests positioning had leaned heavily to the downside, amplifying the move once prices broke higher.
Outlook
With Bitcoin holding above key psychological levels and ETF inflows showing little sign of slowing, attention is now turning to whether demand can continue to outpace available supply. For Bitwise, the risk is skewed to the upside, especially if institutional buyers remain consistent and long-term holders become less willing to sell.
For now, Bitcoin’s reclaim of $96,000 signals renewed confidence, with ETFs firmly at the center of the story.
Disclaimer: This content does not constitute trading or investment recommendations. It’s essential to conduct your own research before purchasing any cryptocurrency or investing in any services.
