BTCBitcoinBullishBitcoinBitcoin Returns Above $63k: What's Driving This Surge?
In the past 2 days, Bitcoin has surged back above $60k. Here are the key factors behind this move.
### Inflation Data
On Friday, U.S. CPI inflation data came in at 3.0% year-over-year, slightly below the expected 3.1%. This lower-than-expected inflation figure has bolstered investor sentiment and triggered a risk-on environment, benefiting the crypto market.
### ETF Inflows
ETF inflows highlight growing investor optimism about a soft landing. Approximately $310 million in net inflows were recorded on Friday, contributing to a total of $1.04 billion for the week.
### German Government BTC Distribution
The German government completed the distribution of its ~50k BTC holdings, which had been causing FUD in the market. This sell-off had been a source of concern, similar to when LUNA sold around 80k BTC, leading to a price drop from $45k to $25k. However, this cycle, the market has shown much greater resilience.
### Market Structure
The recent recovery appears to have been driven primarily by spot market purchases. The Spot CVD has returned to positive territory, indicating healthy buying activity. There were no significant short position liquidations during this move, and funding rates for perpetual contracts remain neutral. This creates a much healthier price structure for Bitcoin to continue consolidating above the current range.
### Reaction to Political Events
We must also comment on the market's reaction following the assassination attempt on U.S. presidential candidate Donald Trump. The market underscored on Saturday that it has a favored side in the U.S. elections. - once it was confirmed that the candidate was unharmed, it became clear that this incident has strengthened his position in the electoral race. Subsequently, increased buying volume entered the market, pushing Bitcoin's price up by approximately 4% in the following hours.
View original →BTCBitcoinBullish(Nuanced)Bitcoin Signs of a Local Bottom?
In the last three weeks, Bitcoin has undergone a correction of approximately 15%, dropping from the $70k range to the $60k range.
With the more significant correction yesterday, signs of a possible local bottom have emerged:
Futures Market: Open Interest has declined by about $3 billion in the past three weeks, with a predominance of long liquidations. The funding rates for perpetual contracts have dropped to near zero, indicating a greater balance between buyers and sellers, creating a healthier and less overly optimistic price structure.
Short-Term Holders: The price has crossed the realized price of short-term holders (STHs), which was at $62.6k. Currently, STHs are experiencing slightly negative average profitability, a point that has historically acted as support for local corrections during uptrends.
A significant factor influencing price action in recent months has been U.S. macroeconomic data, given the uncertainty about the future of American monetary policy, which affects investors' risk appetite. On Thursday, we will have GDP and initial jobless claims data, and on Friday, inflation data (PCE), which are expected to dictate market sentiment in the short term. However, the current structure suggests a possible local bottom.
View original →BTCBitcoinBullishBitcoin Retail is Not Here Yet
A central characteristic of BTC cycle tops is the dominance of coins with a holding period of less than 3 months.
Historically, this indicates that long-term holders (smart money) have already taken their profits, leaving the market under the control of speculators and new entrants, resulting in a more volatile market structure.
In previous cycles, the proportion of the realized cap held by this age group (<3m) exceeded 70% during market peaks. Currently, only about 35% of the realized cap is in the hands of these short-term holders, a level comparable to the early stages of previous bull markets.
Another crucial indicator at the tops of previous cycles is the realized profit level among short-term holders, measured by the SOPR (Spent Output Profit Ratio) of this group, which exceeded 1.10 on a 14-day moving average. In the current cycle, the highest peak was 1.05 when Bitcoin reached its all-time high, now operating in a more neutral zone.
This structure suggests that we have not yet reached the peak euphoria of this cycle. The predominance of long-term holders in the market forms a more solid price support base. This robust structure and the relative scarcity of short-term holders make an immediate transition to a bear market less likely, indicating that there is still potential for a significant rally before the cycle top formation.
View original →BTCBitcoinBullish(Nuanced)Bitcoin New Demand Wave?
In the past 24 hours, Bitcoin's price has risen approximately 4%, trading again above the $70k mark. One of the drivers of this movement has been strong demand through ETFs, with net inflows of...
In the past 24 hours, Bitcoin's price has risen approximately 4%, trading again above the $70k mark. One of the drivers of this movement has been strong demand through ETFs, with net inflows of approximately $1.2 billion over the last week.
Key Observations:
Short-Term Holder Profitability: The recent price increase has restored a healthy level of profitability for short-term BTC holders, reducing the risk of a break in investor sentiment and a reversal from a bullish to a bearish trend.
Price Consolidation: Despite the rise, a consolidation within the $60k to $70k range still seems more plausible for some time. This is due to the lack of significant macroeconomic incentives for a massive influx of capital into the market and the transition to a phase of euphoria, as observed in previous cycles.
Economic Calendar: This week, the economic calendar is weak, which is positive in the current context, considering the still positive sentiment with the latest U.S. inflation data. However, a shift to a risk-off sentiment due to poor economic data could lead to a correction back to the $60k range.
Outlook: Despite my base scenario of consolidation, signs of a new wave of demand are emerging. There is a growing possibility that the next rally could begin sooner than expected.
View original →BTCBitcoinNeutralBitcoin What is the market waiting for?
Over the last two months, Bitcoin has traded sideways, after the recent rally that pushed its price beyond the all-time high. This prompts the question: what is needed to move out of this zone?
Historically, the most rapid expansions in Bitcoin have corresponded with significant increases in the global money supply (M2), signaling periods of high liquidity and strong investor risk appetite. These periods often see substantial new capital entering the market, typically culminating in cyclical peaks driven by retail investors' FOMO.
Yet, this dynamic has not appeared in the current cycle. Despite a slight rise in global liquidity over the past year benefiting Bitcoin, the year-over-year change in M2 has returned to neutral levels early this year. This shift followed persistent inflation data in the U.S., which led to a downward revision in the market's interest rate cut expectations from five to two for 2024.
Currently, there's a lack of immediate signs indicating a surge in demand that could significantly push prices higher. On the supply side, selling pressure has decreased as LTHs have seen price stabilization around $60k, and STHs have reduced sales due to decreased profitability.
Given this context, it seems likely the market will maintain its sideways trend until triggers emerge that can drive a decisive movement. Current market structure, including factors like profitability, leverage, and the age distribution of coins, suggests there's potential for a more expressive rally within this cycle.
The most probable scenario for me is that Bitcoin will stay within this trading range until a more favorable macroeconomic setting emerges, likely centered around the expected first U.S. interest rate cut in September. Such an environment could spark a new demand wave and a subsequent rally, marking the cycle's peak.
P.S.: The upcoming U.S. inflation data, expected this week, is pivotal and may shape market expectations about short-term monetary policy.
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