The cryptocurrency market has experienced a remarkable upswing, with the total market capitalization increasing by over $200 billion in just a few days. This surge has been largely driven by a significant price spike in Bitcoin (BTC), which recently soared above the $67,000 mark. Alongside Bitcoin, Ethereum has also seen impressive gains, with both cryptocurrencies climbing over 10 percent in the past week. Currently, Bitcoin is trading around $67,300, while Ethereum is valued at approximately $2,618.
Factors Contributing to the Crypto Pump
Rising Open Interest (OI)
The fear of further crypto market capitulation has notably decreased, leading to a surge in FOMO (Fear of Missing Out) trades within the crypto ecosystem. The Bitcoin fear and greed index has jumped to 73 percent, reflecting a strong sense of greed among traders. Data from CoinGlass indicates that Bitcoin’s Open Interest (OI) has reached an all-time high, peaking at approximately $40 billion. This significant rise in OI suggests that the crypto market is poised for heightened volatility in the near future.
High Demand from Whale Investors
Bitcoin has witnessed a substantial increase in whale transactions, reaching the highest levels in over 10 weeks. On-chain data analysis by CryptoQuant reveals that new Bitcoin whale investors now possess around 1.97 million coins, indicating a remarkable 800 percent spike year-to-date. Similarly, Santiment reported that there were 11,697 transfers involving amounts of at least $100K on Tuesday alone. As a result, the availability of Bitcoin on centralized exchanges has declined to a five-year low.
US-based spot Bitcoin ETFs have been active participants in this trend, purchasing coins worth over $1.5 billion in just four days. Leading this effort is BlackRock’s IBIT, which contributed to a net cash inflow of approximately $458 million on Wednesday.
October Bullish Sentiment
Historically, Bitcoin has performed well in the fourth quarter of the year. This trend, coupled with the anticipation of the 2024 US elections and expected Federal Reserve rate cuts, suggests a continued bullish outlook for the crypto market. The cryptocurrency sector is likely to follow the upward trajectory of gold and major stock indexes in the coming months.
