Bitcoin’s Soaring Success: $50K Surge with Minimal Retail FOMO and Leverage Benefits BTC

In the past week, the price of Bitcoin has risen by 17.5% and surpassed $50,000 for the first time in over a year. This increase in price can be attributed in part to the inflows into spot Bitcoin exchange-traded funds (ETFs) that began trading on January 11. The largest mutual fund managers, including BlackRock, Fidelity, and ARK 21 Shares, have successfully launched their own spot Bitcoin ETFs, which have quickly accumulated over $10 billion in assets.

It is expected that Bitcoin spot ETF flows will continue to increase as trading firms complete their due diligence on these newly launched investment vehicles. With Bitcoin reaching new multi-year highs, retail investors are paying attention to both the crypto and macro markets. After the S&P 500 closed above 5,000 points for the first time ever, there is a focus on the macroeconomic scenario, especially with the upcoming quarterly earnings reports of companies like Coca-Cola, Airbnb, Coinbase, and DoorDash.

U.S. inflation CPI data will be released on February 13, which will guide the U.S. Federal Reserve’s interest rate decisions. It is anticipated that there may be multiple interest rate cuts from the current level of 5.25%, potentially encouraging investors to move away from fixed-income assets. It is uncertain whether this migration to riskier assets will benefit cryptocurrencies.

Despite the easier access to Bitcoin through spot ETFs, it seems that the asset has not yet gained mainstream attention. Google searches for the phrase “Buy Bitcoin” have remained stagnant in recent weeks, which suggests that retail investors may not be actively participating in the current bull run. This is further supported by the lack of increased activity in stablecoins in China, which typically indicates retail trader demand for cryptocurrencies.

Professional Bitcoin traders have recently added to their leverage long positions, indicating their confidence in the price of Bitcoin. The long-to-short net ratio of top traders at Binance has increased from 1.24 to 1.35, while top traders at OKX have shifted from favoring shorts to a long-to-short ratio of 1.07. This suggests that these traders have become more bullish on Bitcoin’s future.

While there may be some short-term risks due to macroeconomic uncertainty and weakness in the real estate market in China, these conditions also present opportunities for investors looking for alternative investments to hedge against inflation. The sustained increase in Bitcoin’s price above $50,000 has occurred without excessive leverage and the fear of missing out (FOMO) behavior from retail investors. The continued success of the rally will depend on the ongoing inflows into spot Bitcoin ETFs.