Institutional "fuel" pushes Bitcoin to break through $30,000, how long can the market continue to "burn"

Stimulated by the good news that TradFi (traditional finance) is entering the crypto market, Bitcoin continues to rebound, successfully breaking through $30,000 in the early morning of June 22, Beijing time, with a 24-hour increase of more than 10%, and a rebound strength of 80% this year . The last time BTC reached more than $30,000 was in April 2023. Tokens such as Ethereum , Cardano , and Solana also rose. The rebound triggered a wave of short liquidation in the entire market. According to Coinglass data, the total short liquidation amount exceeded $173 million in 24 hours.

On the other hand, U.S. stocks erased the modest gains of the past few trading days, with the Nasdaq Composite and S&P 500 falling 0.7% and 0.5%, respectively, on the day.

Investors are increasingly bullish on the prospects of BlackRock and other major institutions building crypto businesses.

Earlier this week, BlackRock filed an application for a spot Bitcoin ETF that would track the underlying market price of Bitcoin. Coinbase is listed as the Bitcoin custodian for the proposed ETF. BlackRock has maintained a strategic partnership with Coinbase even under intense regulatory pressure from the U.S. Securities and Exchange Commission ( SEC ).

Crypto proponents say more investors will be able to invest in crypto with much lower risk. Importantly, a small number of traditional institutional clients interested in spot BTC ETFs are enough to push the market further up. Ruslan Lienkha, head of markets at Web3 crypto and fiat service provider YouHodler, commented: "The entry of the largest investment company [BlackRock] in the near future seems to completely reshape the crypto market."

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, commented: "BlackRock's application changes everything and reignites the competition." After BlackRock's announcement, other asset management companies also submitted their own spot Bitcoin ETF applications, including WisdomTree and Invesco , which had been rejected by the SEC.

The EDX cryptocurrency exchange, backed by major TradFi players , also launched earlier this week. The exchange, which is backed by Fidelity Digital Assets , Charles Schwab and Citadel Securities , will offer trading in four tokens in the U.S., including Bitcoin, Ethereum, Bitcoin Cash and Litecoin . Bitcoin Cash (BHC) also rallied following the news, gaining 25% on the day.

The moves by traditional financial firms go some way toward dispelling the gloom surrounding the SEC’s crypto enforcement actions, including lawsuits against exchange operators Binance Holdings Ltd. and Coinbase Global Inc., in which the SEC designated a slew of digital tokens as unregistered securities.

Meanwhile, in Europe, Deutsche Bank has applied for regulatory permission to operate a digital asset custody service. “Unless its big clients express enough interest, it is unlikely to do this business easily because the costs are not low,” wrote Noelle Acheson , author of the Crypto Is Macro Now newsletter.

Hayden Hughes, co-founder of social trading platform Alpha Impact, said in his tweet: “The rally is supported by institutional demand. BlackRock’s announcement on Bitcoin ETF and EDX Markets has boosted Bitcoin as people hope that traditional institutions can increase the liquidity depth of the crypto market.”

Investors are closely watching macroeconomic indicators for movement in crypto markets, including the prospect of further monetary tightening after the Federal Reserve paused its rate hikes this month.

Traders are also awaiting further clarity on the expected size of China’s economic stimulus, with the People’s Bank of China recently cutting borrowing costs. IG Australia Pty market analyst Tony Sycamore said in his blog that China’s potential stimulus impact on Bitcoin has not been “fully released.”

Futures markets show bullish sentiment heating up

BTC futures data shows traders are shifting from majority shorts to longs. According to Coinglass, 54.24% of traders are long Bitcoin. Coupled with reduced spot volumes and net outflows of Bitcoin from exchanges, prices could fluctuate further. Typically, when net outflows of Bitcoin from exchanges increase, selling pressure decreases, driving short liquidations to impact BTC prices by a larger margin.

The Bitcoin Fear and Greed Index has reached a three-month high, highlighting investors’ preference for riskier assets.

Some analysts say the momentum for continued gains remains as Bitcoin has broken through a key resistance level that analysts have been watching.

Vijay Ayyar, head of international markets at CoinDCX , India's largest cryptocurrency exchange, said in an interview with CNBC: "A series of spot Bitcoin ETF application announcements from large institutions have undoubtedly restored bullish sentiment in the cryptocurrency market. BTC's main support level is $25,000, and we have seen that this trend is driven more by pure spot purchases rather than short liquidations."

Bitcoin is still far below its 2021 all-time high of $69,000. Ayyar believes that from the perspective of market structure, BTC has now broken the main downward trend that started in April this year and lasted for about 2 months, so the next step will be to test the $32,000 level. After a successful breakthrough, it will have the potential to rise to $36,000, and then $45,000 to $48,000.