Trumping to a New ATH

Executive Summary

• This article explores Bitcoin’s recent rally to a new all-time high, examining the factors driving this upward momentum, particularly the strong demand in spot markets over perpetual futures.
• We analyze the impact of the recent U.S. election on institutional inflows, highlighting how U.S. spot ETFs and CME futures open interest have surged as cash-and-carry strategies gain popularity.
• The ATH discovery phase is assessed, focusing on the percentage of supply in profit and the market dynamics that accompany prolonged periods above 95% profitability.
• We delve into on-chain cost basis bands to track demand momentum, illustrating how proximity to these bands can signal periods of strong market demand.
• Finally, we examine realized profit levels, noting significant profit-taking activity yet indicating that current levels remain below those seen in previous ATH peaks, suggesting room for continued growth.

A Post-Election Surge

After the U.S. presidential election results came in, with consensus pointing toward a more crypto-friendly stance under the Trump administration, a positive signal reverberated through the cryptocurrency market, propelling Bitcoin to a new all-time high. This break to ATH was echoed across all major BTC: Forex pairs.

This chart illustrates the drawdowns from ATH for Bitcoin (BTC) paired with various fiat currencies and gold (XAU). Notably, the BTC: TRY (Turkish Lira) pair was the first to hit its ATH on 26 June 2024, leading the charge before other pairs followed suit. On 06 November 2024, nearly all BTC: Forex pairs reached new ATHs, except BTC: Gold, which remains approximately 19.9% below its ATH despite Bitcoin’s current valuation at $88.6k USD.

The BTC:Gold pair remains approximately -19.9% below its ATH despite Bitcoin’s current USD valuation at $88.6k USD.

Historically, U.S. presidential elections have significantly impacted Bitcoin’s market performance, with notable shifts observed in both price and realized cap—representing the cumulative wealth invested in the Bitcoin network.

2016 Election (Republican administration):

• Realized capital surged by 20.3% leading up to the election and climbed 55.5% afterward.
• Price rallied by 34.7% pre-election and soared by 124.6% in the post-election months.

2020 Election (Democrat administration):

• Realized capital inflows grew by 16.5% before and by 196.3% after the election.
• Price advanced by 35.4% pre-election and skyrocketed by 306.8% afterward.

2024 Election (Republican administration, thus far):

• Realized capital increased by 13.3% leading up to the election but edged up slightly by 2% after.
• Price appreciated by 10.1% before the election and gained 27.9% in the post-election period (to date).

The current cycle, therefore, reflects a more modest response in the run-up to prior elections, although still with a very optimistic tilt. The market is currently adjusting to the likely shifts in crypto-policy, which can be expected in the coming years.

Continuing the momentum from the recent ATH breakout, Bitcoin recorded its largest-ever weekly candle, with a staggering $11.6k gain. This rally vastly exceeded historical weekly moves, nearly five times the upper statistical band (1 standard deviation), signaling unprecedented bullish strength.

This exceptional price action reflects market optimism, with participants viewing the anticipated regulatory landscape as a catalyst for sustained capital inflows.

Spot-Driven Breakout

The chart highlights the daily Cumulative Volume Delta (CVD) on Coinbase’s spot market, showing a significant uptick in buyer-side pressure. Recently, the daily spot CVD reached $143M, approaching the previous peak of $152M recorded on March 13.

Since July, every Bitcoin rally has been accompanied by a strong surge in buy-side interest on Coinbase, signalling robust spot market demand in one of the largest US exchanges. This persistent appetite from investors suggests that market participants are increasingly constructive on digital assets and reinforces the spot-driven nature of the prevailing rally.

Following the solid buyer-side pressure observed on Coinbase’s spot market, the recent rally saw substantial inflows into U.S. spot ETFs, with assets under management rising by $8.8 billion in the last 30 days. This growth outpaced the $6.9 billion increase in CME futures open interest, indicating a pronounced preference for spot-driven exposure via ETFs.

The correlation between ETF inflows and CME open interest highlights the dominance of cash-and-carry strategies. Yet, the more robust ETF demand underscores a shift toward direct spot exposure during this market upswing.

Usually, sustained demand in the spot market momentum is followed by a similar positive momentum in perpetual futures. The recent premium peak in perpetual markets—reaching $1.59M/Hour per hour (with a 7-day average of $392k/Hour) on November 12th—reflects solid speculative demand.

However, this level remains below the mid-March highs, reinforcing the hypothesis that the current rally has been more spot-driven. The tempered yet significant appetite in perpetual markets underscores that spot demand, rather than leveraged speculation, is the dominant force behind this price surge so far.

Discovery of Euphoria Phase

Bitcoin has entered a new price discovery phase, putting all of the circulating supply into profit. This chart shows the percentage of supply held in profit, alongside the count of consecutive days each month where this metric is more than 95%.

Historically, these euphoric phases have persisted for around 22 days before a correction occurs, pushing more than 5% of the supply below the original acquisition price. The current rally has maintained this high-profit level for 12 consecutive days, underscoring strong market sentiment but also hinting at the possibility of a correction ahead based on past patterns.

This chart examines cumulative realized profit during the New ATH Discovery phase, highlighting the scale of profit-taking activity. Historically, monthly profit realization ranged between $30 billion and $50 billion before demand exhaustion set in, often signalling a cooling-off period.

Currently, we’ve observed $20.4 billion in realized profits since entering this latest ATH discovery phase. While profit-taking is substantial, it remains below historical peaks, suggesting additional room for further gains before reaching potential demand exhaustion.

Discovery Phase Bands

As we enter a new ATH discovery phase, identifying the most effective price model to navigate this heightened market activity becomes essential. This chart displays the cost basis of new investors, along with upper and lower statistical bands (±1 standard deviation).

During ATH discovery phases, Bitcoin’s price often approaches and tests the upper band multiple times, driven by solid demand momentum as new investors enter at higher price points. Currently, Bitcoin’s price stands at $87.9k, just shy of the upper band at $94.9k. Monitoring the proximity to these bands, especially the upper and middle bands, can highlight periods of intense market demand, reflecting the eagerness of new capital to enter the market during rally phases.

Currently, with Bitcoin’s spot price at $87.9k, it is shy of the upper band at $94.9k. Monitoring the proximity to these bands, especially the upper and middle bands, can highlight when periods of intense demand are slowing down, and where price is high enough for many existing holders to ramp up their sell-side pressure.

Realized profit volumes are currently averaging around $1.56B/day, with long-term holders contributing $720M, accounting for 46% of the total.

Despite this uptick in profit-taking activity, the aggregated realized profit volume is around half of what was recorded during the previous cyclical ATHs (which breached $3B/day, with more than 50% attributed to long-term holders). This again suggests that there may be further room for upside if demand continues to flow in and that more sell-side pressure is required before typical peak levels of profit realization are reached.

Summary and Conclusion

This newsletter examined Bitcoin’s recent all-time high, primarily driven by solid spot market demand, mainly through U.S. spot ETFs. Institutional interest has surged post-election, with notable inflows into CME futures and ETFs, favouring spot exposure and fueling Bitcoin’s entry into a new ATH discovery phase. Over 95% of the circulating supply is now in profit, typically followed by significant profit-taking.

Almost all of the circulating BTC supply is now held in profit, although this is balanced by a significant uptick in profit-taking activity. While realized profits by both short- and long-term holders have increased, they remain below previous ATH peaks, which may indicate many investors are willing to wait for higher prices.

Disclaimer: This report does not provide any investment advice. All data is provided for information and educational purposes only. No investment decision shall be based on the information provided here and you are solely responsible for your own investment decisions.

Exchange balances presented are derived from Glassnode’s comprehensive database of address labels, which are amassed through both officially published exchange information and proprietary clustering algorithms. While we strive to ensure the utmost accuracy in representing exchange balances, it is important to note that these figures might not always encapsulate the entirety of an exchange’s reserves, particularly when exchanges refrain from disclosing their official addresses. We urge users to exercise caution and discretion when utilizing these metrics. Glassnode shall not be held responsible for any discrepancies or potential inaccuracies. Please read our Transparency Notice when using exchange data.

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