OPUSD Optimism

Key points:

• Bitcoin gained 3% to above $105,000 on May 20, fueled by high open interest in the futures market and increasing institutional demand.

• A classic bullish pattern is in play, targeting BTC price at $138,000 and beyond.

Bitcoin (BTC) is up today, rising over 3% in the last 24 hours to over $105,500 on May 20. 

Data from Cointelegraph Markets Pro and TradingView shows that the BTC/USD pair climbed as much as 5% to an intraday high of $107,148 on May 20 from a low of $102,100 on May 19. 

Let’s take a look at the factors driving up Bitcoin price today.

Spot Bitcoin ETF inflows boost BTC price

Bitcoin's recent price rise coincides with rising capital inflows into US spot Bitcoin exchange-traded funds (ETFs), highlighting the growing demand for regulated exposure to the cryptocurrency.

Spot Bitcoin ETFs have recorded inflows 18 out of the last 21 days, accumulating a total of $6.9 billion in new capital in three weeks, as per data from Farside Investors.

Additional data from CoinShares reveals that institutional investors asserted their optimism in crypto markets as $785 million flowed into crypto investment products, marking a five-week streak of inflows. 

Bitcoin investment products attracted $557 million in inflows over the past week, indicating growing investor confidence in Bitcoin as a long-term asset.

More institutional demand came from corporate investors, with Strategy, formerly MicroStrategy, the top corporate Bitcoin holder, acquiring 7,390 BTC worth about $765 million last week. Japan’s Metaplanet has bagged another 1,004 BTC for about $129 million as per a May 19 announcement. 

With increasing institutional demand for Bitcoin, the price is well-positioned to continue its upward trajectory toward all-time highs and into price discovery.

Bitcoin OI hit all-time highs

An increase in open long BTC positions in the futures market preceded Bitcoin’s rally to $107,000. Bitcoin’s total open interest (OI) in the derivatives market increased to an all-time high of $72.63 billion on May 20 from $57.1 billion on April 19, data from CoinGlass shows. 

The chart above shows that Bitcoin’s OI has jumped 27% in the past 30 days, suggesting increased demand for leveraged BTC positions.

Additionally, Bitcoin CME futures OI also hit a 90-day high of 157,875 BTC on May 19, worth approximately $16.76 billion at the time, as per Glassnode data. 

With the current strong demand for BTC futures contracts, investors are expecting Bitcoin to continue its uptrend similar to the one that occurred between late October 2024 and December 2024, when rising OI accompanied BTC’s 84% rally to its previous all-time highs of $108,000 reached on Dec. 16, 2024.

Bitcoin’s cup-and-handle pattern targets $138,00

From a technical perspective, the BTC/USD pair has been forming a cup-and-handle chart pattern on its daily chart since Dec. 17, 2024.

A cup and handle setup is a technical formation that appears when the price falls initially, followed by a steady recovery in what appears to be a U-shaped recovery, which forms the cup. 

The recovery leads to a pullback move, wherein the price trends lower inside a descending channel, forming the handle.

The pattern is resolved when the price breaks above the handle, rallying to an approximately equal size to the prior decline. The BTC/USD daily chart below illustrates a similar bullish technical setup.

Note that BTC's price now trades above the handle range and is pursuing a break above the neckline resistance at $106,000. 

A decisive daily candlestick close above the neckline could lead the BTC price to confront resistance from the $109,000 all-time high.

Breaking this barrier would clear the path toward the technical target of the prevailing chart pattern at $138,000, up 31% from the current level.

As Cointelegraph reported, a move to new highs of $116,000 could come as early as this week.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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