(Kitco News) – Bitcoin (BTC) is off to a strong start to the week as the top crypto spiked back above $72,000 in early trading on Monday and now trades less than 3% below its all-time high of $73,750. 

Data provided by TradingView shows that after trading near $69,400 over the weekend, Bitcoin bulls initiated a move higher in the early hours on Monday, galloping past resistance at $71,000 to hit a high of $72,780 shortly after 8 am EST.  

BTC/USD Chart by TradingView

At the time of writing, Bitcoin trades at $71,710, an increase of 3.1% on the 24-hour chart. 

Monday’s move higher suggests the pre-halving pullback for Bitcoin is now complete, as it has regained most of what was lost while ETF inflows have started to tick higher again. 

“Bitcoin ETF volume hasn’t slowed down four weeks after the $BTC #AllTimeHigh,” said on-chain analytics firm Santiment. “Among $GBTC, $IBIT, $FBTC, $ARKB, $BTCO, $BITB, and $HODL, trader activity is still notably higher than the turning point that began in late February after an influx of individual trading began (and hasn’t stopped since).”

“It is a likely foregone conclusion that high activity should continue leading up to the April 19th #halving, but it will be interesting to see whether a drop-off in #ETF volume and on-chain volume will occur directly afterward,” they added. 

Stablecoin activity suggests bulls are gearing up for a rally

While Bitcoin’s price has traded sideways and consolidated since early March, it could soon resume its climb higher, according to Markus Thielen, Head of Research at 10x Research. 

“After being massively bullish since January 25, we turned cautious precisely a month ago (March 8) as the forward returns appeared unpredictable based on the market’s technical setup,” Thielen said in his Monday market update. “Trading (crypto) is about risk-reward and knowing when to bet big and when to bet small, and the last thirty days were indeed a period when to bet small. But this will change soon.”

“Bitcoin has traded in a symmetrical triangle formation last month,” he noted. “Based on some historical analysis, 75% of triangle patterns will see continuation patterns (of the bull run) and higher prices.”

“A symmetrical triangle may be set up for a breakout, which can be calculated by taking the distance from the upper support line and the lower resistance at the start of the pattern and then adding that to the breakout price point,” he said. 

Thielen noted that based on the current formation, “triangle lines will meet by April 18; this indicates that we will break either side ahead of the halving. If the breakout is bullish, which we suspect, Bitcoin could climb above 80,000 during the next few weeks – if not earlier. Buying at 69,280 and setting a stop loss at 65,000 appears appropriate.”

The reasons why Thielen thinks Bitcoin will breakout higher include the understanding that “we are still in a bull market, the fear of no (or less) Fed rate cuts appears to have been quickly replaced with the idea that the (US) economy is still strong, and while ETFs have significantly cut their daily net buying, the overhang of Genesis selling $2.1bn of GBTC shares which have been moved into Bitcoin will now see less GBTC outflows,” he said. 

“Other bullish arguments are that the US government’s debt still explodes, both presidential candidates (Biden and Trump) will continue to spend, and that US election years tend to be blockbuster years for Bitcoin,” he added. “With gold making new all-time highs almost every day, so should Bitcoin. As the Fed keeps rates higher for longer, the USD will likely remain strong, and this will cause EM currency devaluation – cryptocurrencies denominated in USD offer a solution.” 

On the bearish side of the equation, “trading volumes have sharply declined, which signals a lack of (buying) interest (from retail but mainly from everybody),” Thielen said. “Lack of trading volumes keeps the funding rate low, which brings in fewer delta-neutral hedge funds as arb opportunities are limited, which have likely overstated the ETF flows as only the buy flow is widely reported (while the crypto media essentially needs to pay more attention to the short futures leg).”

Futures data suggests profit-taking could occur before the halving, he noted, “as option open interest is centered on the 70,000 strike level. Any move in either direction could significantly impact the delta of those options, as the April 26 expiry has $5.7bn notional outstanding and is unsurprisingly a very large expiry.” 

But rather than focus on ETF flows or futures data for insights into what comes next, Thielen said that stablecoin volumes provide a better clue about what to expect. 

“During the last 30 days, we have seen the ETFs register around $5bn of net inflows, while Tether has minted $6.9bn, and Circle has minted around $3bn—together, $10bn of new money coming through the stablecoin door,” he said. “While Bitcoin ETF flows have dictated the media attention, the minting from stablecoins is twice as large and might be long-only exposure, contrary to the ETFs.” 

“We suggest paying less attention to the Bitcoin ETF flows,” Thielen said. “Stablecoin issuers are the new Sheriff in town, driving this market higher.”

“Although we voiced our concerns about weak ETF flows, the baton has been passed on to the stablecoin issues to drive this market higher,” he concluded. “Tether has just recorded a 7-day minting signal of $2.4bn, one of the highest recorded since this bull market began. Fiat money is being moved into crypto at an accelerated pace. With a looming symmetrical triangle breakout, we want to be bullish.”