- Bitcoin went past $108,000, fueled by bullish whales and institutional activity, before crashing.
- Funding rates maintain relatively low activity, indicating spot dominance.
Bitcoin [BTC] maintained a bullish stance earlier this week, judging by its push for price discovery. The cryptocurrency hit a new all-time high above $108,000 on Wednesday, December 18, and this new advantage was largely helped by whale activity.
Bitcoin’s bullish performance earlier this week raised hopes of a possible surge to $110,000 before the end of the week if momentum were to be maintained. The king of cryptos hit a new all-time high of $108,364 on Wednesday, proving once again that the bulls were still in control.
On-chain data confirmed healthy whale activity as inflows from large holders grew from 619.43 BTC on December 14 to 3,620 BTC on December 17. Meanwhile, large holder outflows dropped from 11,060 coins on December 16 to 917 BTC the next day.
Source: IntoTheBlock
The large flows of keepers therefore showed an increase in demand, around the same time that whale selling pressure decreased significantly.
As a result, the demand wave became higher. However, as of Wednesday, there was a notable drop in inflows from large holders by about half to 1843 BTC. This was still higher than the outflow of 473 BTC.
To top it all off, Bitcoin also achieved overall positive flows from ETFS. The latest BTC ETF data revealed that ETF inflows peaked at 275.3 million BTC on Wednesday.
Are Bitcoin Bears Taking Over?
Despite these observations, there were notable outflows from some ETFs, including Grayscale and Ark Invest. Despite the robust bullish performance, a big pullback quickly followed, ending the day closer to $101,000. This could indicate the possibility of some profit taking or further outflows in the near term.
The pullback was mainly due to the market’s knee-jerk reaction to Fed Chairman Jerome Powell’s statement. Powell noted that the FED should not own Bitcoin.
Bitcoin spot market flow data showed that outflows were dominant over the past three days. This was especially true on Wednesday, when net outflows spiked to $824.78 million.
source: Coinglass
Why are these observations essential? Based on observations so far, whales and institutions have driven this week’s rally. An indication that they expected higher prices. Meanwhile, the retail sector appeared to buckle under the pressure as prices entered new territory.
Bitcoin funding rates data shows relatively muted activity compared to the first half of December or November. A sign that derivatives traders were proceeding cautiously this week to avoid liquidations.
Read Bitcoin’s [BTC] Price forecast 2024-25
In other words, demand on the spot market was arguably more dominant this week and the number of liquidations was relatively low.
source: Coinglass
Low funding rates could indicate lower volatility and possibly little friction in Bitcoin’s bullish efforts. However, traders should be cautious, especially now that several ETFs have seen outflows.