Bitcoin [BTC] continues to dominate the news, riding on its upward trend and recently hitting a new all-time high of $107,822.
This latest milestone underscores Bitcoin’s remarkable performance so far this year, with gains surpassing 150% at the current moment.
Following this peak, the asset underwent a minor correction, trading at $107,064. This represented a marginal 0.6% decrease from the recent high but still indicated a 2% increase over the past day.
Against the backdrop of this price surge, a recent analysis by CryptoQuant delves into the fundamental market dynamics influencing the current rally, with a focus on the escalating significance of spot market demand in fueling Bitcoin’s price surge.
Influx of Spot Market Demand Propels Bitcoin’s Momentum
The CryptoQuant analyst notes that Bitcoin’s prevailing bull cycle, which commenced in early 2023, initially stemmed from speculative activities in the Futures market.
However, since October 2024, the trend has shifted as both spot and Futures markets witnessed heightened trading volumes, driving further upward momentum in Bitcoin’s value.
Recent developments indicate a cooling off in Futures market activities, with spot market activities gaining prominence.
This transition implies escalating buying pressures from long-term investors and retail traders, curbing speculative excesses and establishing a more solid base for sustained price growth.
Furthermore, the analysis highlights that the funding rate, assessed through a 30-day exponential moving average (EMA), shows no indications of overheating in the late phase of the cycle.
This indicates that Bitcoin’s bullish trajectory still has room for expansion without immediate signs of a downturn.
The analysis also forecasts that while the Futures market may witness cycles of heightened activities and liquidations, this volatility could attract additional capital inflows into the spot market.
Rising Positive Sentiments
Besides the surge in spot market demand, several crucial Bitcoin metrics corroborate the asset’s optimistic projection.
Data from Coinglass indicates an increase in Bitcoin’s Open Interest, a metric gauging the total value of outstanding Futures contracts, aligning with its price surge.
Specifically, BTC’s Open Interest has climbed by 2.56%, reaching $68.82 billion, with longer-term data reflecting a substantial 19.13% hike, totaling $100.63 billion.
The surge in Open Interest typically signifies escalating market activities and investor confidence in Bitcoin’s future price trends.
Moreover, CryptoQuant data sheds light on Bitcoin’s Market Value to Realized Value (MVRV) ratio, which has soared to 2.69 as of December 16.
The MVRV ratio serves as a pivotal on-chain metric for assessing an asset’s valuation relative to its realized worth.
An MVRV ratio above 2.5 indicates a vigorous bull phase for Bitcoin, potentially signaling forthcoming profit-taking by investors.
Historically, MVRV values surpassing 3 have often indicated market peaks; therefore, the current level of 2.69 suggests further upside potential for Bitcoin while advising traders to proceed with caution.