Last week, the Bitcoin market had a daily inflow of nearly $1.75 billion, investor confidence recovered, and $50,000 was a key breakthrough point.

Bitcoin continued its upward breakthrough on Monday, with bulls trying to push the price to $50,000. As traders appear to be exiting short positions, BitTorrent terminal data shows that Bitcoin has risen by about 15% in the past week. As of press time, the trading price is hovering above $49,000, with a daily increase of 1.68%.

Strong buyer demand

Glassnode data shows that last week, about $1.75 billion in funds flowed into the Bitcoin market every day with buyer demand, and about 10.3% of the circulating supply of Bitcoin was restored as unrealized profits.

Analysts deduce that, in addition to the $29,000 to $40,000 range from May to July, the recent lows of $40,000 to $41,000 represent an important "value-added" area for buyers who buy on dips and set a price floor, with a total of 86.6% of circulating BTC currently in unrealized profit.

Glassnode analysts pointed out that if you look at the profitability breakdown between long-term (LTH) and short-term holders (STH), STH has benefited the most from this rally overall. Currently, about 15.6% of the BTC supply is held by investors who bought in the past approximately 155 days and have not realized profits. Profitable LTH currently holds 73.4% of the supply, and the remaining 11% of tokens are in a loss (STH:LTH ratio is 31:69). As most of the market returns to profitability, it creates motivation for some investors to take profits and restores the faith of holders.

$69 million flows into Bitcoin investment products

According to a report released by CoinShares on Monday, investment products focusing on Bitcoin saw net inflows of $69 million last week. After suffering the longest outflow on record, Bitcoin investment products have seen net inflows for the third consecutive week, with inflows totaling $115 million. CoinShares analysts believe that this decisive shift in sentiment is due to increased investor confidence in the asset class, as well as expectations that the U.S. Securities and Exchange Commission (SEC) will approve crypto ETFs and that the Federal Reserve will not take measures to shrink its balance sheet in the short term.

Bitcoin short covering

According to a report from FundStrat, Friday’s notable technical breakouts in some cryptocurrencies led to “the highest levels of significant short covering and futures short liquidations in over a month.” Short covering occurs when investors with short positions (i.e. assets they have sold betting on further declines) are forced to cover their short bets by buying in the market as prices rise, generating further gains.

A breakout occurs when demand for an asset exceeds supply, causing prices to rise above a specific resistance level. For Bitcoin, the most recent breakout level is around $46,000, indicating that traders are beginning to exit short positions. “The cycle composite chart shows that Bitcoin was trending upwards before topping out in late November/December,” wrote Mark Newton, managing director and head of technical strategy at FundStrat.

FSInsight said Bitcoin has the potential to begin its "traditionally bullish fourth quarter seasonal rally." The firm's first upside target is $52,956 - the September high, followed by $64,895. FSInsight said the hourly momentum may be overbought, but the "buy on the dip" daily momentum indicator is not overbought.

Breaking through $50,000 is the key

$50,000 is a key psychological level, options trader and anonymous Twitter user Rekt Capital said that BTC’s recent dip was strongly bought, and if bulls want to continue to push prices higher, a close above $50,000 is important, Rekt Capital said: “This is what needs to flip to support revisiting the area above $50,000”. In addition, if bulls can break through $50,000-53,000, the next step should be to return to the $60,000 area for the first time since May 2021.