Bitcoin’s volatility surged this week following a period of stagnation. Opening at $64,620, it hit a low of $56,910 before closing at $63,395 (CME Exchange).

This rollercoaster ride saw a staggering $13,400 intraweek swing.

Bitcoin hovered in the lower-mid $60k range until Tuesday when sellers pushed it below $60,000. Although buyers briefly reclaimed the $60k mark during Tuesday’s trading, selling pressure intensified on FOMC day on Wednesday, leading to a dip to $56,935. Bulls regained momentum during Friday’s NYSE session, driving prices back above $60k, closing at $63,395.

The move below $60,000 triggered the largest long liquidation in over two weeks, with nearly half a trillion dollars in long positions being liquidated. As the previous swing low was at $59,600, all long liquidity around this point was tapped, allowing the move to the mid $50ks to occur swiftly.

Bulls Strike Back

On Friday bitcoin surged 5% to over $62,000 in response to weaker-than-expected US employment data, fueling expectations of Fed rate cuts. This price action reflects a years-long dynamic where bad news for traditional markets, like disappointing employment figures, can be interpreted as good news for risk-on assets including bitcoin, as it increases the likelihood of monetary easing measures.

As the Fed contemplates potential rate cuts amidst a weakening labor market and unwavering inflation, bitcoin’s price action underscores its growing recognition as a hedge against traditional economic uncertainties.

Spot ETF Flows Update

The downtrend in spot ETF flows persisted from the prior week, with outflows peaking on Thursday, totaling over half a billion dollars. However, Friday saw a reversal with a net inflow of $388 million. Notably, on Friday, Grayscale’s GBTC experienced its first day of net positive inflows since its conversion to an ETF in January, recording $63 million on May 3.

This comes after over $17.5 billion in outflows following the launch of bitcoin ETFs. Despite Friday’s net inflow, total net assets aggregated across all spot ETFs decreased by over $2 billion since last week, currently standing at $51 billion, $10 billion lower than the peak of $61 billion seen in mid-March.

Weekly Technical Analysis

This week’s price action led bitcoin to touch down on the 21 Exponential Moving Average (EMA), currently situated around $56,536 (indicated by the yellow line in the chart above). Throughout bitcoin’s history, the 21-weekly EMA has served as a reliable zone of dynamic support and/or resistance. When the price trades above the 21 EMA, it typically supports bullish price action.

Conversely, closing below this crucial moving average often signifies bearish price conditions or the initiation of a long-term downtrend. Bitcoin has already rebounded over 9%, or $5,000, since tagging the 21 EMA. Therefore, as long as it remains above this pivot point, we can anticipate generally bullish conditions to persist.

Bitcoin Dominance

The bitcoin dominance metric maintains its upward trajectory this year, currently hovering near 55%, surpassing the critical 54% threshold. This indicates that bitcoin constitutes a majority (55%) of the total crypto market capitalization. Amid this week’s sell-off, many altcoins experienced significantly larger declines than bitcoin, resulting in a spike in bitcoin dominance.

This suggests a shift of funds from speculative altcoins to the perceived safety of bitcoin. As long as bitcoin dominance continues its uptrend, we can generally anticipate bitcoin to outperform most altcoins.

‍