Bitcoin Price Prediction: BTC recovery holds as ETF inflows persist
- After recovering more than 3% earlier this week, Bitcoin trades slightly lower on Wednesday amid rising tensions in the Middle East.
- US-listed spot Bitcoin ETFs recorded $203.14 million in net inflows on Tuesday, marking the sixth consecutive day of positive flows.
- Optimism surrounding the CLARITY Act is growing after the White House reportedly agreed on ethics language, potentially removing the final hurdle before a Senate floor vote.
Bitcoin (BTC) trades slightly lower around $66,000 on Wednesday as tensions in the Middle East escalate further. Still, the Crypto King is up over 2.5% so far this week. The strengthening price action is further supported by the return of institutional demand, with US-listed spot Bitcoin Exchange Traded Funds (ETFs) continuing to see inflows on Tuesday, and optimism surrounding the CLARITY Act continues to bolster market sentiment.
Middle East tensions cap BTC’s recovery
The US military said it completed the 11th night of strikes on Iran early Wednesday, targeting aircraft hangars and drone storage sites. Adding to this, US President Donald Trump warned that the US strikes would be intensifying and hit any site where Iran attempts to rebuild its nuclear program.
Iran, on the other hand, continued attacks across the Gulf, targeting US military assets in Bahrain, Kuwait and Jordan. Adding to this, Iran said that its forces struck two oil tankers as they attempted to transit through the Strait of Hormuz. Furthermore, Yemen's Iran-aligned Houthis opened a new front in the war and declared a naval blockade against Saudi Arabia.
These renewed uncertainties have dampened the risk appetite, which caps BTC's upside.
Persistent institutional demand supports BTC recovery
Institutional demand remains strong so far this week. SoSoValue data shows that spot BTC ETFs recorded an inflow of $203.14 million on Tuesday, marking the sixth consecutive day of positive flows. The sustained inflows suggest institutional investors are gradually returning to the market, amid the hopes of a US-Iran peace deal. If these flows continue and intensify this week, BTC could see further recovery.
Progress on the CLARITY Act fuels regulatory optimism
The White House has agreed to a comprehensive ethics provision for the Digital Asset Market Clarity (CLARITY) Act, potentially clearing a major obstacle to the crypto regulation bill on Tuesday, as reported in the previous report. The development has strengthened expectations for clearer US crypto regulations, supporting positive market sentiment.
The breakthrough is expected to pave the way for finalizing the updated bill text, advancing the legislation to a Senate floor vote, and potentially securing its passage before the August deadline, provided it receives sufficient bipartisan support.
In an exclusive interview with FXStreet, Jessica Martinez, US Policy Director at Fireblocks, said the digital asset market will continue to evolve regardless of whether the CLARITY Act is passed.
"The good news is that the market will keep moving whether CLARITY passes or not. So the question becomes which entities are prepared to move with it," Martinez said.
She noted that large institutions are already building under the existing regulatory framework, while more cautious banks and asset managers are waiting for rules they believe will withstand future court challenges or changes in administration.
“Agency actions can provide direction, but legislation will provide durability. Without it, adoption continues, just more unevenly and with fewer institutions willing to move at scale,” she added.
Bitcoin Price Forecast: BTC takes a breather after recent recovery
Bitcoin trades at $66,040 at the time of writing on Wednesday, maintaining a mildly constructive tone as it remains above the 50-day Exponential Moving Average (EMA) at $65,138, while still capped by the 100-day EMA at $68,103 and the distant 200-day EMA at $74,393.
Momentum conditions support a bullish bias in the short term, with the Relative Strength Index (RSI) on the daily chart hovering at 58 and the Moving Average Convergence Divergence (MACD) histogram remaining positive, suggesting ongoing upward pressure despite overhead EMA barriers.
On the downside, initial support is seen at the 50-day EMA near $65,138, followed by a more meaningful horizontal floor around $64,004.
On the topside, bulls face immediate resistance at the 100-day EMA at $68,103, ahead of the 200-day EMA near $74,393 and the higher horizontal resistance near $84,410, which together define the medium-term cap unless buyers can extend the current recovery.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
