Original title: These Six Charts Explain Why Bitcoins Recent Move to Over $ 100 K May Be More Durable Than Januarys Run
Original author: OMKAR GODBOLE
Original translation: Ismay, BlockBeats
Editors note: Bitcoins new high on Pizza Day is like a celebratory gift from fate to the crypto market. But unlike previous bull markets, this time Bitcoins new high is just a carnival for BTC alone, and the growth of the altcoin market is not large. This article uses six charts to explain why Bitcoins recent breakthrough of $100,000 may be more sustainable than the rise in January. Key indicators such as the financial environment and the inflow of stablecoins show that the foundation of this round of gains is more solid than the double top market from December last year to January this year.
The key information is as follows:
Bitcoin is currently trading above $100,000, and the market environment shows that the basis for this rise is more solid than the double top market from December last year to January this year;
The current financial environment, stablecoin inflows, and the performance of spot ETFs are all more favorable to Bitcoin than before;
Other key indicators also show no signs of the overheating and speculative sentiment that was seen at the end of last year and the beginning of this year.
Bitcoin is currently priced at $106,546.31, having re-entered the $100,000 mark. As investors are often susceptible to the recent bias, many people may think that this trend will repeat the situation from December last year to January this year, when the upward momentum quickly weakened and the price quickly fell back to the six-digit range, eventually falling back to $75,000.
However, judging by the next six charts, the current Bitcoin market appears more robust than the December-January period, which means that the probability of further gains is also higher.
Financial conditions refers to a range of economic variables including interest rates, inflation, credit availability and market liquidity, which are often influenced by macroeconomic indicators such as benchmark Treasury yields (such as the U.S. 10-year Treasury yield) and the U.S. dollar exchange rate.
A tight financial environment will suppress risk appetite in the financial market and the real economy, while a loose environment will encourage more risky investment behavior. So far, judging from the 10-year US Treasury yield and the US dollar index, the current financial environment is obviously looser than in January this year, which is conducive to the continued rise of Bitcoin.
At the time of publication, the dollar index, which measures the greenback against a basket of major currencies, was at 99.60, down 9% from its January high of 109.00. The 10-year U.S. Treasury yield was at 4.52%, down 30 basis points from its January high of 4.8%.
Although the 30-year U.S. Treasury yield has risen above 5%, returning to the level of January, the market generally believes that this is a positive factor for Bitcoin and gold.
There is also dry gunpowder in the market
The combined market capitalization of the two largest dollar-denominated stablecoins, USDT and USDC, has reached a record high of $151 billion, nearly 9% higher than the average market capitalization of $139 billion from December to January, according to TradingView data.
In other words, there is now more dry powder in the market - that is, potential funds that can be used to invest in Bitcoin and other crypto assets.
Strong directional bets
Since Bitcoin rebounded from a low of nearly $75,000 in early April, the current rally has been led by institutions, whose bets are mainly long rather than taking arbitrage strategies.
This can be seen from two aspects: first, the spot Bitcoin ETFs listed in the United States continue to attract a large amount of capital inflows; second, the size of open interest in CME Bitcoin futures contracts remains relatively mild.
According to data source Velo, the notional open interest of CME Bitcoin futures has climbed to $17 billion, the highest since February 20. But this value is still significantly lower than the peak of $22.79 billion in December last year.
On the contrary, according to data from Farside Investors, the cumulative inflows into the current 11 spot Bitcoin ETFs have hit a record high of $42.7 billion, far higher than the $39.8 billion in January this year.
Signs of speculative frenzy missing
Historically, Bitcoins periodic or cyclical tops (including December last year to January this year) are usually accompanied by highly speculative sentiment in the market, which tends to push up the market value of non-serious tokens such as DOGE and SHIB.
However, there are no similar signs at present, and the total market value of DOGE and SHIB is still far below its January high.
No signs of overheating
Although Bitcoin is currently close to its historical high, it is reasonable that there is a certain demand for long leverage in the perpetual contract market. However, the overall position is still light, showing no signs of excessive leverage accumulation or long overheating, and the funding rate is also far lower than the high point in December last year.
The chart shows the funding rate, which is the cost of holding a perpetual contract. A positive value indicates that longs are willing to pay a premium to hold their positions, which means that longs pay shorts to continue to maintain their positions. This is often seen as a bullish sentiment indicator in the market.
Implied volatility shows a stable market
Judging from the implied volatility, the current Bitcoin market appears calmer. Deribit’s DVOL index (which reflects the expected volatility over the next 30 days) is significantly lower than the levels seen in December last year and January this year, and in March 2024 when prices peaked.
Low implied volatility means that traders are not expecting sharp swings or significant uncertainty, which is usually a sign of an overheated market. Therefore, it also suggests that this upward trend is more rational and may be more sustainable.
