After a promising drive toward a historic high of $100,000, confidence among Bitcoin advocates is beginning to wane. Chris Newhouse, director of research at Cumberland Labs, noted, “While we’re seeing strong institutional buying pressure, particularly from entities like MicroStrategy’s continued accumulation strategy, the broader crypto ecosystem is experiencing a diversification of capital flows from both institutional and non-institutional participants.”
As Bitcoin’s price stabilizes, attention is shifting to other cryptocurrencies, particularly Ether, which is the second-largest digital asset, as well as XRP. These assets have not kept pace with Bitcoin’s surge, especially following the election of President Donald Trump, who has emerged as a supporter of cryptocurrency. This has heightened expectations for more favorable U.S. regulation of the often-contentious asset class.
According to Bloomberg data, both Bitcoin and Ether exchange-traded funds (ETFs) recorded unprecedented monthly net inflows in November, amounting to $6.5 billion and $1.1 billion respectively. Furthermore, Ether ETF subscriptions reached an all-time high on Friday.
Fadi Aboualfa, head of research at Copper Technologies Ltd., commented on the trends, stating, “After six weeks of positive inflows, we have seen a week of sales and derivative traders are using ETF demand as a macro gauge for direction. Early Bitcoin ETF investors might be keen to rebalance their portfolios, having more than doubled their money.”
Options Market
In the crypto options market, there has been an increase in downside protection for Bitcoin with later expirations this month, while Bitcoin futures have experienced moderate leverage. This trend has persisted as the digital currency hovered near $99,000, according to data from Coinglass.
Vetle Lunde, head of research at K33, highlighted that “on-chain data point toward active profit realization from traders in the medium-term cohort (traders who bought in the range of 55k-70k), and profit taking has been particularly intense with BTC trading north of 90k.” He explained that this metric estimates Bitcoin movements based on price at the last transaction. The significant activity within this price cohort is unusual and indicates heightened trading operations at current levels.
The open interest for Bitcoin options and futures contracts has remained subdued following substantial liquidations during Bitcoin’s recent rally.
“The market has taken a pause over the last 10 days as Bitcoin sits just under 100k. Vols have compressed slightly into the 64th percentile, whilst Ether holds significantly higher at the 81st,” Wintermute OTC trader Jake Ostrovskis remarked.
Market concerns also intensified on Monday when blockchain analysis firm Arkham reported that approximately $2 billion worth of Bitcoin, previously taken from the Silk Road, was moved from U.S. government wallets to the Coinbase exchange. This development often triggers declines in prices as traders fear a significant influx of Bitcoin into the market.
As of 9:33 a.m. Tuesday in Singapore, Bitcoin remained steady at $95,734, having reached a record high of $99,728 on November 22.
© 2024 Bloomberg L.P.
