Bitcoin has demonstrated significant price movements recently, pushing above $124,000 and having touched the mid-$120,000 range in the last 24 hours. Earlier in the week, Bitcoin achieved record highs exceeding $126,000. However, a period of profit-taking by investors and a strengthening U.S. dollar have tempered some of these gains, challenging what is known as the “debasement-trade” flows. At the time of this writing, Bitcoin is trading at $123,962.

Many investors are increasingly utilizing Bitcoin as a strategic hedge against a potential devaluation of the dollar, a phenomenon referred to as “debasement trades” within financial circles. The pronounced surge observed earlier in the week was largely propelled by substantial inflows into Bitcoin exchange-traded funds (ETFs) and speculative positioning on anticipated fiat currency weakness, further exacerbated by a prolonged U.S. government shutdown. According to Bloomberg analyst Eric Balchunas, BlackRock’s IBIT ETF emerged as a leading performer, capturing $3.5 billion in weekly inflows, which constituted 10% of the total net flows across all ETFs. Notably, all 11 of the original spot Bitcoin ETFs also recorded positive inflows, underscoring robust demand for these investment vehicles. Launched just 21 months prior, IBIT is rapidly approaching an impressive $100 billion in assets under management, making it BlackRock’s most profitable fund and outperforming products that have been established for over two decades.

Despite this strong performance, market sentiment has been influenced by prevailing uncertainties. The ongoing U.S. government shutdown, now in its second week, alongside the delay in the release of crucial economic data, has led some investors to gravitate towards traditionally safer assets. This shift has temporarily exerted downward pressure on Bitcoin’s immediate appeal. Nonetheless, market analysts remain largely optimistic about Bitcoin’s trajectory. They view the recent price correction, which saw Bitcoin dip to approximately the $122,000 range, as a healthy development that could establish a stronger foundation for subsequent gains. Current technical analysis indicates that a support level is holding near $120,000, while resistance is anticipated around the $135,000 mark. As market analyst Mags commented on X, “Overall, dips are for buying,” reflecting a prevalent bullish sentiment.

Supporting this positive outlook, onchain data further reinforces strong buying momentum. A report from Glassnode highlights that Bitcoin’s relative strength index (RSI) climbed from 44 to 66 over the past week, signaling a notable increase in market confidence. The persistent U.S. fiscal impasse may also be contributing to an amplified demand for assets perceived as safe havens. Geoffrey Kendrick, who serves as the head of digital assets at Standard Chartered, has suggested that Bitcoin could realistically reach $135,000 in the near term and potentially $200,000 by the year’s end, provided current market conditions endure. Concurrently, gold has also maintained its upward momentum, buoyed by central bank purchases and expectations of future easing policies from the Federal Reserve. Adding to the bullish indicators, short-term Bitcoin whales—defined as entities holding over 1,000 BTC acquired within the last five months—are currently sitting on substantial paper gains, estimated to be around $10.1 billion, as reported by CryptoQuant.