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Bitcoin (BTC) has performed remarkably over the past week, rising 30% since the November 5 US election. The flagship crypto surpassed its all-time high in March (ATH) and recorded a new high almost every day over the past seven days. Bitfinex analysts noted that the market remains “relatively stable” despite increased speculative activity.
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Bitcoin ‘fair value’ priced at higher levels
Following Donald Trump’s victory last Tuesday, the crypto market has seen a massive rally, rising to a market capitalization of $3.05 trillion. Bitcoin has led the post-election bullish run with a 30% price increase, approaching the $90,000 mark earlier today.
According to Bitfinex Alpha reportthe rally highlights “the positive reaction to the election outcome, with investors positioning themselves for potential economic stimulus and regulatory shifts.”
During the March highs, BTC’s realized profit volume peaked at $3.1 billion. Since then, realized profit volumes have gradually decreased, ‘with an equilibrium being reached’.
As the report noted, there has been a reset in supply and demand forces, indicating that, in addition to the recent price increase, “the market is now pricing in a higher ‘fair value’ for Bitcoin.” At the same time, the cryptocurrency continues its price discovery.
Furthermore, profit taking above $70,000 has been significantly smaller than in the past when Bitcoin traded above this range, despite a structural increase in profit taking.
Bitfinex analysts believe this signals the “entry of a new wave of market demand,” supported by Spot Bitcoin exchange-traded funds (ETFs) buying up after the election. Additionally, it suggests that new investor interest “could provide further upside momentum in the near term.”
BTC is entering ‘a new phase’
The report highlighted record inflows from BTC ETFs, approximately $2.28 billion in three days. This performance represented a significant increase from the risk reduction prior to the election, with crypto-based investment products recording their second largest outflows in a single day.
According to CoinShares factsBitcoin ETFs ended US election week with $1.8 billion in inflows and started this week with $1.1 billion in positive net inflows. This performance signals a revival in demand for the flagship crypto as the market adjusts to BTC’s new price levels.
Bitfinex analysts explained that there was significant supply from March to August and not enough sustained buying pressure to absorb it. The recent surge in demand signals a notable shift as buying interest “absorbs selling pressure at record highs and stabilizes market dynamics:
Now it appears we are entering a new phase where the volume of profit taking when BTC hits an all-time high is significantly lower given the amount of new demand coming into the market after the election. This demand is helping to absorb the light selling pressure still present, indicating a healthier market environment and potential for further upside.
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Meanwhile, Open Interest (OI) in Bitcoin futures and perpetual contracts reached ATH, reaching $45.43 billion. The report explains that this signals an increase in speculative activity, but notes that the market remains “relatively stable” as OI and BTC prices are “in equilibrium at high levels.”
Ultimately, Bitfinex expects some consolidation soon, with a potential pullback to $77,000. A correction towards this level would close BTC’s CME gap and strengthen Bitcoin’s position to climb even higher levels.
At the time of writing, Bitcoin is trading at $86,225, up 5% on the daily time frame.
Featured image from Unsplash.com, chart from TradingView.com
