Bitcoin is approaching regaining its $100,000 level after temporarily soaking under $75,000.
Investor sentiment has improved, but it is still nowhere to be found in post-election locations.
The influx of Bitcoin ETFs has returned as investors see Bitcoin as a potentially secure asset.
It was already a wild year for Bitcoin. (Cryptography: BTC)and it’s only four months. Bitcoin has surged to a new all-time high of $109,000 than President Donald Trump’s inauguration, shortly below $75,000 after new tariffs were announced, and recently regaining its $95,000 price level for the first time since February.
Bitcoin has changed little over the past year, with a modest 2% increase. So, before we declare that Bitcoin is back in full, let’s pump the brakes a bit. There are three important factors to keep in mind.
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For better or worse, Bitcoin relies heavily on investors’ sentiment. This year is the perfect example of this. Heading into this year, all the lights appeared to be flashing green in the Trump presidency, and Bitcoin prices have skyrocketed in value. Crypto investors had already won the winning lap in late January.
But now, look at the sentiment of investors. The Crypto Fear & Greed Index is at 52 and is on the Smack Dub on the right halfway through the 0-100 scale. Essentially, half of all investors feel nervous and uneasy about Bitcoin, while the other half feels cheerful and whimsical about Bitcoin.
Typically, sustained Bitcoin rallies require a terrifying and greedy index to collide with high levels in the stratospheric, such as after an election where the index reaches 88.
It is impossible to ignore the speed at which investors’ sentiment about Bitcoin has recovered. For example, back in March, Fear & Greed Index was offering less than 20 reads. Therefore, the 52 “neutral” readings have been significantly improved.
Another clue about Bitcoin comes from the online forecast market. For example, if you look at Kalshi’s online forecast market, you can see what investors think about the possibility that Bitcoin will reach various price levels.
Currently, investors say Bitcoin is likely to reach $125,000 this year, with 46% likely to reach $150,000, while 29% could reach $150,000. Not bad, is it? But investors also say there is a 43% chance that Bitcoin will drop by $70,000, while 29% will fall below $60,000.
The story continues
Image source: Getty Images.
In short, investors think it’s likely to surge to $125,000 just as Bitcoin drops to $70,000. Now that it has nearly regained its psychologically significant $100,000 price level, Bitcoin could trade within a relatively narrow range until the end of the 90-day delay in Trump’s tariff adoption.
If many trade transactions have appeared by then, Bitcoin could possibly pop. However, if the US economy deteriorates and the trade contract is not signed, all bets will be turned off.
One of the best metrics for tracking Bitcoin these days is that an influx of Exchange-Traded Funds (ETFs) will flow into Spot Bitcoin ETFs. When Bitcoin was surged at the start of the year, investors were rushing to hand their fist to these ETFs. Then, when tariffs began to roll out, investors were in a hurry to withdraw money from these ETFs.
Doesn’t it make sense, right? Trading these ETFs is as easy as trading high-tech stocks, providing a powerful tool for investors to increase or decrease their exposure to Bitcoin with just one click.
The good news is that ETF leaks from the beginning of this year seem to be turning back, and money is now back in Bitcoin ETFs. The most obvious reason is that investors have been looking for safe assets recently, and Bitcoin is beginning to look pretty good as an asset of global, non-sovereign and non-dollar religions.
For now, the worst Bitcoin slump seems to be over. Investor sentiment is improving, with the influx of Bitcoin ETFs rising, with almost half of investors thinking that Bitcoin could reach $125,000 this year.
Of course, that’s a much more modest price target than many investors returned in January, but given how volatile the broader market has become this year, I think many crypto investors will take it now.
Remember: Bitcoin is a very unstable asset, and just because your current slump is over doesn’t mean that it will disappear from volatility. If you’re thinking about investing in Bitcoin this year, this will be a rocky ride.
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Dominic Basulto has a position in Bitcoin. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
Bitcoin is backed up. Are major cryptocurrency slumps above? Originally published by The Motley Fool
