- Bitcoin’s recent rally is driven by robust spot market demand and institutional inflows.
- A shift toward ETF demand and strong buyer-side pressure suggests a sustainable market upswing.
- Despite record profits, there’s room for further price appreciation before potential demand exhaustion.
Bitcoin’s impressive rally to new all-time highs (ATH) is primarily fueled by sustained spot demand and a significant surge in institutional inflows. This momentum follows the U.S. presidential election results, which have boosted Bitcoin’s prospects under a more crypto-friendly administration.
According to the Glassnode report, the price has steadily advanced across various BTC:Forex pairs, with the BTC:TRY pair leading the charge, setting the stage for the ATH breakthrough.
BTC’s market performance post-election has been remarkable. Although less pronounced compared to previous cycles, price appreciation has been consistent, with a 27.9% rise post-election as of November 2024.
This echoes the historical pattern of election cycles influencing BTC’s realized capital and market performance, setting the stage for potentially significant gains in the coming months.
Spot Market Dominates, ETF Demand Surges
Spot market activity has played a crucial role in driving Bitcoin’s price surge, particularly seen in Coinbase’s spot market. With daily Cumulative Volume Delta (CVD) on Coinbase reaching $143M, investor appetite for BTC is at record levels.
This has been echoed by the remarkable rise in U.S. spot ETF assets, which have grown by $6.8 billion in just 30 days. The demand for spot exposure outweighs futures, with the correlation between ETF inflows and CME futures open interest reflecting a strategic shift towards direct market involvement.
The persistence of spot-driven momentum in the Bitcoin market signifies a shift away from leveraged speculation and towards more organic, long-term investment. As a result, the potential for continued price discovery remains high, with institutional investors taking a larger stake in Bitcoin’s future price action.
Bitcoin Profit-Taking Rises, But Growth Potential Remains
As Bitcoin enters a new price discovery phase, nearly all circulating supply is now in profit, which has historically signaled the peak of a rally. Currently, 95% of Bitcoin’s supply is in profit, reflecting strong market sentiment.
However, past market cycles show that such euphoric phases typically last around 22 days before corrections set in. Despite significant profit-taking activity, realized profits remain below historical peaks, leaving room for further growth.
While Bitcoin’s price stands at $87.9k, nearing the upper statistical bands, it is not yet overbought, suggesting potential for continued upward movement. However, with growing profit-taking activity, the market remains on edge, and careful monitoring is essential to gauge the sustainability of this rally.
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