Bitcoin Hits $116,000: Institutional Buying Fuels Rally?
Bitcoin Price Surges Past $116,000
Bitcoin has just reached a new all-time high, surpassing $116,000. Unlike previous rallies, this surge is backed by significant institutional investment. South Korea's K Wave Media, for example, reportedly purchased 88 BTC as part of a larger $1 billion treasury allocation. But can this rally avoid a repeat of May's drop to $98,000?
Decreased Exchange Inflows: A Sign of Confidence?
Data from CryptoQuant reveals a dramatic decrease in Bitcoin exchange inflows, reaching their lowest point since 2015 at 3,200 BTC per day. This contrasts sharply with December 2024's 97,000 BTC during a similar price surge. The reduced inflow suggests lower sell pressure and increased investor confidence.
As Alexander Zahnd, Ziliqa's interim CEO, noted in an interview with BeInCrypto, "In the near term, the momentum appears real – institutional demand is rising, ETF inflows are strong, and companies continue to add Bitcoin to their balance sheet."
Strong Support Levels: Analyzing On-Chain Data
IntoTheBlock's In/Out of Money Around Price (IOMAP) metric shows a significant demand wall. Over 645,000 addresses bought BTC between $108,795 and $110,624, totaling 476.65K BTC. This suggests strong support near current prices.
Unlike the May crash, where support levels quickly crumbled, this substantial accumulation of BTC near the current price acts as a robust buffer against immediate price drops.
RSI Divergence: A Cautious Note
While Bitcoin's price reaches new highs, the Relative Strength Index (RSI) shows a bearish divergence—making lower highs. This often precedes a correction. However, the RSI remains below the overbought zone (under 72), unlike May's peak near 80, suggesting a significant correction is less likely. A retracement, however, is a possibility.
Fibonacci Extensions: Potential Upside Targets
Using trend-based Fibonacci extensions, potential resistance levels are:
- 0.382: $112,439
- 0.5: $116,857
- 0.618: $121,274
- 1.0: $135,576
Bitcoin's recent price action near the 0.5 Fibonacci extension indicates potential for further gains toward $121,000 and $135,000, provided momentum holds.
Conclusion: Cautious Optimism
Bitcoin's price is currently above its May high, supported by lower sell pressure, evident institutional buying, and strong support clusters. Fibonacci analysis suggests further upside potential. However, the RSI divergence warrants caution. A break below key support around $109,632 could trigger a retracement. Whether this rally is sustainable remains to be seen.
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