Bitfinex Warns Bitcoin Rally Lacks Essential Spot Demand

Bitcoin Rally Faces Challenges Amid Lack of Spot Demand

According to the latest report from Bitfinex, Bitcoin’s recent price rebound appears to be driven by external macroeconomic factors rather than consistent buying support. The report notes that while Bitcoin closed at $65,086 on July 14, achieving a 4.4% gain and marking its highest close since June 22, this rally may lack the necessary backing from spot demand.

Macroeconomic Factors at Play

Bitfinex highlighted that the spike in Bitcoin’s price is primarily a response to softer inflation data from the US, which has reshaped expectations around interest rates. The June Consumer Price Index (CPI) fell by 0.4% from the previous month, with annual inflation decreasing to 3.5%. This shift in economic indicators has reportedly led to diminished fears regarding further rate hikes, with expectations for a July increase dropping from 42% to approximately 12.3%.

Concerns Over Sustained Growth

Despite the optimistic price movement, Bitfinex has categorized this rally as exhibiting “borrowed strength” due to a lack of persistent spot buying. The report points to a negative Coinbase premium and inconsistent inflows into US spot Bitcoin exchange-traded funds (ETFs) as signs that the underlying demand for Bitcoin has not strengthened.

ETF Flows as Market Indicators

On July 13, US spot Bitcoin ETFs experienced net outflows of $424.7 million, erasing gains from the prior week, which had been the first instance of positive flows after a streak of nine weeks of withdrawals. However, there was a turnaround on July 14 with $181.1 million in net inflows, driven largely by BlackRock’s IBIT ETF, which accounted for $138.9 million of the total.

Key Resistance Levels

Bitfinex emphasized that for Bitcoin to gain foothold above the $68,000 to $68,300 range, consistent ETF demand and stronger spot buying are critical. Currently, this price level is identified as a significant decision point, with the short-term holder cost basis near $68,073. If Bitcoin fails to achieve these support levels, it could remain trapped within its broader trading range.

Looking Ahead

As macroeconomic conditions continue to shape the crypto market, Bitfinex warns that factors such as rising oil prices or renewed inflation concerns could lead to abrupt shifts in market sentiment. The firm maintains a cautious outlook until there is clear evidence of sustained spot demand capable of supporting Bitcoin’s price amidst fluctuating economic circumstances.