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Bitcoin (BTC) has demonstrated exceptional performance over the past week, soaring by 30% following the November 5 US election. The leading cryptocurrency has surpassed its previous all-time highs (ATH) set in March, with new highs being recorded nearly every day for the last week. According to analysts from Bitfinex, the market remains “relatively stable” despite the heightened speculative activity.
Bitcoin ‘Fair Value’ Priced In At Higher Levels
Following Donald Trump’s victory last Tuesday, the cryptocurrency market experienced a remarkable rally, achieving a market capitalization of $3.05 trillion. Bitcoin spearheaded this post-election bullish trend with a 30% surge, coming close to the $90,000 threshold earlier today. The Bitfinex Alpha report highlights that this rally underscores the positive investor sentiment toward the election results, as investors position themselves for potential economic stimuli and regulatory changes.
During the heights of March, Bitcoin’s realized profit volume peaked at $3.1 billion. Since then, these volumes have progressively declined, reaching an equilibrium point. The report indicates a reset in supply and demand dynamics, suggesting that the market is now pricing Bitcoin at a higher ‘fair value.’ Simultaneously, Bitcoin continues its journey of price discovery. Interestingly, the level of profit-taking above $70,000 has been notably smaller compared to previous instances when Bitcoin traded in this range, despite a structural increase in profit-taking. Bitfinex analysts interpret this as a sign of “a new wave of demand entering the market,” bolstered by Spot Bitcoin exchange-traded funds (ETFs) purchasing post-elections. This renewed interest from investors could potentially drive further upward momentum in the near term.
BTC Enters ‘A New Phase’
The report further emphasizes record-breaking BTC ETFs’ inflows, amounting to approximately $2.28 billion over three days. This marks a significant increase from the pre-election de-risking period when crypto-based investment products recorded their second-largest single-day outflows. According to data from CoinShares, Bitcoin ETFs concluded the US election week with $1.8 billion in inflows and commenced this week with $1.1 billion in positive net flow. This performance indicates a resurgence in demand for Bitcoin as the market adapts to its new price levels.
Bitfinex analysts noted that from March to August, there was a considerable supply with insufficient buying pressure to absorb it. The recent surge in demand signifies a substantial shift, as buying interest now absorbs selling pressure at all-time highs and stabilizes market dynamics. It appears that Bitcoin is entering a new phase, where the volume of profit-taking during all-time highs is significantly lower due to fresh demand entering the market post-election. This demand is effectively absorbing the minor selling pressure that remains, indicating a healthier market environment and potential for further upward movement.
Open Interest and Market Stability
Meanwhile, Open Interest (OI) in Bitcoin futures and perpetual contracts has reached all-time highs, touching $45.43 billion. This signifies an increase in speculative activity, yet the market remains “relatively stable” as OI and Bitcoin prices are in equilibrium at elevated levels. Bitfinex anticipates some consolidation in the near future, with a potential pullback to $77,000. Such a correction would close Bitcoin’s CME gap and fortify its position for even higher levels. As of this writing, Bitcoin is trading at $86,225, reflecting a 5% increase on the daily chart.
In summary, Bitcoin’s recent performance post-election has been nothing short of spectacular, capturing the attention of investors worldwide. As market dynamics continue to evolve, Bitcoin’s trajectory suggests further potential for growth and stability.
