Galaxy says time to accumulate bitcoin citing ETF demand and rising U.S. debt

Alex Thorn, head of firmwide research at Galaxy, stated in a note titled “Why now is the time to add and hold BTC” that “We think the bear market ended in June and that bitcoin is in the accumulation phase that has preceded every prior advance.”

The firm posits that the bear market concluded in June when prices were under $58,000. Supporting this view are positive price chart indicators, reduced selling pressure, and increasing fiscal risks, making the largest market capitalization cryptocurrency attractive for accumulation.

Bitcoin recently rallied to around $80,000, marking a 38% increase from the June lows under $58,000. However, prices remain approximately 35% below the peak of over $126,000, meaning a 53% rise is needed to reach that high.

Thorn noted that bitcoin has recovered above its 50-week moving average, following 44 weeks spent below it. Five consecutive weekly closings above this level have reinforced the conviction that the market bottomed.

Positioning data also supports this thesis. Net long exposure held by asset managers via CME bitcoin futures has decreased by 57% from the week of the record high. Furthermore, several major trading firms have significantly cut their ETF holdings, indicating that speculative capital has withdrawn.

Galaxy observed that spot bitcoin ETFs acquired 87,000 BTC after the June low, which suggests renewed directional demand as arbitrage activity subsided. The firm also views rising U.S. debt, ongoing deficits, and increasing interest costs as factors strengthening bitcoin's appeal as a fixed-supply asset.

Galaxy acknowledged that risks exist, including broader market declines, quantum computing, and AI-related disruption. However, the firm cautions that a weekly close below $76,540, without a recovery within a month, would challenge its technical outlook.

These indicators suggest a shift in market dynamics, where institutional capital withdrawal and increased government debt influence the perception of crypto assets within the broader financial landscape.

Why it matters

This analysis from Galaxy provides a bullish technical outlook on Bitcoin, suggesting accumulation is warranted despite recent price stagnation. Investors should monitor whether Bitcoin can sustain its recovery above key technical levels, as failure to do so could challenge the firm's thesis.