Bitcoin flashes rare bullish divergence as $90K target looms

Bitcoin flashed its second weekly bullish divergence on record, a signal that preceded a 755% rally from the FTX-era lows.

"The weekly RSI divergence is a rare structural signal that historically marks major cycle turning points," Alex Kuptsikevich, chief market analyst at FxPro, said.

BTC traded at $63,712 as of 10:30 UTC on Monday, up 4% from Sunday's low, after the signal emerged on the weekly chart. The previous occurrence in late 2022 preceded a rally from $16,000 to over $73,000. Open interest across bitcoin futures has collapsed to 716,000 BTC from a record 901,000 BTC four days ago, Coinglass data shows, as forced long liquidations cleared leveraged positions.

The bullish divergence comes as bitcoin hovers near its 200-week simple moving average, a level that has historically acted as a key battleground at major cycle turning points. A break above $65,000 resistance could open the path toward $90,000, though traders caution that a full reversal may take months. The Crypto Fear & Greed Index fell to 8 on Monday, its lowest reading since early April, a level that has historically coincided with market bottoms.

ETF flows tell a different story from February

Spot bitcoin ETF outflows accelerated for a fourth straight week, reaching $1.72 billion in the week ended June 5, SoSoValue data shows. That marks a sharp reversal from February, when BTC last tested $60,000 and ETF outflows slowed to $318 million as buyers stepped in. This time, institutional selling has intensified as prices fell, suggesting a more bearish institutional stance at current levels.

The divergence between the on-chain signal and institutional flow data creates an unusual setup. The bullish divergence suggests selling pressure may be exhausting, while ETF flows indicate institutions have yet to rotate back into bitcoin exposure.

Macro catalysts could determine the next leg

Wednesday's May CPI report will be the next major test for risk assets. The April print showed reaccelerating inflation, triggering $5.4 billion in spot bitcoin ETF redemptions since May 12, according to 10x Research's Markus Thielen. A cooler CPI reading could reverse that trend and provide the macro catalyst needed to validate the bullish divergence signal.

Ether traded at $1,850 as of Monday, recovering from a weekend low near $1,500 that briefly pushed its market cap below Tether's USDT. The broader crypto market remains correlated with bitcoin, with altcoins showing mixed recovery.

Key support sits at $60,000, where dealer gamma dynamics could amplify any move lower. Resistance at $65,000 must clear for the $90,000 target to become viable, with the 200-week SMA acting as the immediate battleground.

This article is for informational purposes only and does not constitute investment advice.