(Kitco News) – Bitcoin’s (BTC) price consolidated lower in early trading on Thursday following a seven-day rally that saw King Crypto gain nearly 16% after hitting a low of $58,900 a week ago.
Data provided by TradingView shows that Bitcoin has limped lower since hitting a high of $68,414 on Wednesday, with bulls working to defend support at $67,000.
BTC/USD Chart by TradingView
Many analysts say this is just a temporary pause in the building bull market and a welcome sight after days of gains as it allows some of the froth that has accumulated in futures markets to dissipate.
According to Vetle Lunde, Head of Research at K33 Research, Bitcoin’s open interest (OI) hit a new all-time high of 179,745 BTC on Wednesday, an increase of 32,440 BTC since last Thursday when its price bottomed out below $59,000.
CME's open interest marched even higher yesterday, closing at new notional all-time highs of 179,745 BTC.
Open interest has grown by a massive 32,440 BTC since October 10 - and active market participants drive this growth, seeing a weekly growth in exposure of 40%. pic.twitter.com/elDHs6vBCN— Vetle Lunde (@VetleLunde) October 17, 2024
And it's not just derivatives that are seeing an uptick in demand as flows into U.S.-listed spot Bitcoin exchange-traded funds (ETFs) have pushed their assets under management to a new all-time high.
“Yesterday, U.S. spot ETFs surpassed 950,000 BTC under management, marking a new all-time high,” Lunde said. “These relentless flows have pushed global BTC ETP beyond 1.2m BTC for the first time.”
In addition to these bullish factors, data provided by CryptoQuant shows that Bitcoin exchange reserves have reached the lowest level ever recorded by the analysis firm, which has been tracking the metric since October 2021.
The finer details show that more than 51,000 Bitcoins have been withdrawn from major cryptocurrency exchanges over the past month, reducing the liquid supply of Bitcoin, which has had a positive impact on its price.
The reduction in exchange reserves coincides with the Mt. Gox Bitcoin distribution and an uptick in the reserves held by Coinbase being moved into cold storage custody, possibly by institutional players, CryptoQuant Head of Research Julio Moreno told The Block.
The data further shows that new institutional wallets have increased their accumulation of Bitcoin in the past 30-day window.
“The buying pressure from this new accumulation is something we haven't seen before. New whales are pushing Bitcoin prices higher as they buy more,” CryptoQuant community analyst J.A. Maartunn said. “Right now, these new whales hold 1.97 million Bitcoin. It's worth mentioning that this isn't just from the spot Bitcoin ETFs, there are also other whales involved.”
New whale wallets now hold 1.97M #Bitcoin.
Each has over 1K BTC, average coin age under 155 days, excluding exchange and miner wallets, likely custodial.
Their BTC balance surged 813% YTD, taking up 9.3% of the total supply, valued at $132B today. pic.twitter.com/pxq0tcqMuW— Ki Young Ju (@ki_young_ju) October 16, 2024
The rising price of Bitcoin has also enticed retail traders back into the market, with their level of involvement close to hitting the “high demand” level characteristic of bull market cycles.
Retail investors are returning to the market. The current metric stands at 7%, and an increase of 3% will indicate strong demand from retail players. pic.twitter.com/dn4pGN5Ji5
— Axel ?? Adler Jr (@AxelAdlerJr) October 16, 2024
According to Alice Liu, Lead Researcher at CoinMarketCap, the results of the upcoming election in the U.S. could be the thing that really kicks the bull market into overdrive.
“With the November U.S. election coming up, the market has the opportunity to gain further clarity, and we would likely have the chance to create another new ATH this year, with the bull market in full blast in the first half of 2025,” she said in a note shared with Kitco Crypto.
“The first time we hit the $68K mark was in March 2024, coinciding with peak interest in Google Keyword trends at a score of 100,” Liu noted. “Currently, BTC price is back at $68k, but Google Keyword trend score is at a mere 33. A few other social indicators also seem to suggest that even though the price is back, retail interest hasn’t. CMC Pageview and Community Interactions for Bitcoin are currently just 70% of what they were in March 2024, when BTC first hit $68K.”
“One defining characteristic of Bitcoin's current market dynamics is the influx of institutional players who now see BTC as a strategic asset,” she said. “This shift marks a significant change from previous cycles when institutions primarily saw Bitcoin as speculative. Large companies and asset managers have started integrating Bitcoin into their investment portfolios or treasuries, which gives Bitcoin more legitimacy and reduces its perceived risk as a fringe investment.”
Liu highlighted that the “pump on October 15 was an immediate effect of the 5,650 Bitcoin inflows into the Bitcoin ETFs on the day, combined with BlackRock CEO's crypto endorsement and positive Q3 earnings result,” which “showcases the significance of ETFs and institutional adoptions in this market cycle.”
“Meanwhile, hedge funds are increasingly turning to Bitcoin,” she added. “In an environment where traditional markets are oversaturated, and alpha generation has become challenging, hedge funds see Bitcoin as an asymmetric bet.”
“Additionally, with the November U.S. election coming close, there’s a heated political debate about Bitcoin potentially as a strategic reserve asset, akin to gold in the past,” Lui said. “From the speeches at Nashville by Trump, JFK, and Lummis, there’s an increasingly detailed plan to acquire BTC as a national reserve asset.”
“Current Polymarket data showing Trump’s chances of winning against Harris at 58.5%, with over $587 million betted, the market gets another boost this week with pro-crypto sentiment. This level of political endorsement has been a unique characteristic fueling this Bitcoin cycle,” she concluded. “If nations or large institutions begin to hold Bitcoin as part of their reserves, Bitcoin’s role in the financial system will evolve dramatically, fully expressing its ‘Digital Gold’ potential.”
At the time of writing, Bitcoin trades at $67,060, a decrease of 1.03% on the 24-hour chart.
