This article explores the recent all-time high (ATH) in BTC, analyzing the factors driving this bullish momentum, particularly the strong demand for perpetual futures from the spot market. We analyze the impact of the recent U.S. election on institutional capital inflows, highlighting how the growing popularity of spot holding strategies has led to a surge in U.S. spot ETFs and Chicago Mercantile Exchange (CME) futures open interest.
We assess the ATH discovery phase, focusing on the supply percentage in profit and the market dynamics accompanying a sustained profitability above 95%. We delve into on-chain cost basis bands to track demand momentum, explaining how the proximity of these bands can signal periods of robust market demand.
Finally, we examine the realized profit levels, noting the apparent profit-taking activity, but indicating that current levels remain below previous historical highs, suggesting room for further growth.
The Post-Election Surge
After the U.S. presidential election results were announced, the market generally perceived the Trump administration as more crypto-friendly, providing a positive signal for the crypto market and driving BTC to a new ATH. All major BTC:FX pairs reached new all-time highs.
The chart shows the drawdown from ATH for BTC against various fiat currencies and gold (XAU). Notably, BTC:TRY (Turkish Lira) was the first to reach a new ATH on June 26, 2024, preceding the other pairs. On November 6, 2024, nearly all BTC:FX pairs set new highs, except for BTC:Gold, which remains about 19.9% below its ATH, despite BTC's current valuation of $886,000.
Despite BTC's current USD valuation of $886,000, the BTC:Gold pair remains about -19.9% below its ATH.
Historically, U.S. presidential elections have had a significant impact on BTC's market performance, with both price and realized capitalization (representing the cumulative wealth invested in the BTC network) experiencing notable changes.
2016 Election (Republican Administration):
- Realized capital increased by 20.3% pre-election and 55.5% post-election.
- Price increased by 34.7% pre-election and 124.6% in the following months.
2020 Election (Democratic Administration):
- Realized capital inflows grew by 16.5% pre-election and 196.3% post-election.
- Price increased by 35.4% pre-election and 306.8% post-election.
2024 Election (Republican Administration to date):
- Realized capital increased by 13.3% pre-election but only 2% post-election.
- Price increased by 10.1% pre-election and 27.9% post-election (so far).
Therefore, the current cycle reflects a more moderate response compared to the previous elections, although it remains highly optimistic. The market is currently adapting to the potential changes in crypto policy that may occur in the coming years.
BTC has continued its recent record-breaking momentum, setting the largest weekly candle on record, with a gain of $116,000. This rally has far exceeded the historical weekly trend, nearly five times the statistical upper limit (1 standard deviation), indicating an unprecedented bullish momentum.
This abnormal price behavior reflects the market's optimistic sentiment, with participants viewing the expected regulatory environment as a catalyst for continued capital inflows.
The Breakout Driven by Spot Trading Volume
The chart highlights the daily cumulative volume delta (CVD) on the Coinbase spot market, indicating a significant rise in buying pressure. Recently, the daily spot CVD reached $143 million, approaching the previous high of $152 million set on March 13.
Since July, each BTC rally has been accompanied by a substantial increase in buying interest on Coinbase, one of the largest U.S. exchanges, suggesting strong spot market demand. This sustained interest from investors reflects their growing optimism towards digital assets and reinforces the current rally's spot-driven nature.
Following the strong buying pressure in the Coinbase spot market, the recent rebound has also driven a significant inflow of capital into U.S. spot ETFs, which have seen an increase of $6.8 billion in assets under management over the past 30 days. This growth exceeds the $7.6 billion increase in CME futures open interest, indicating that investors clearly prefer spot investment through ETFs.
The correlation between ETF inflows and CME open interest highlights the dominance of spot holding strategies. However, the stronger ETF demand underscores the shift towards direct spot positions during this market rally.
Typically, spot market demand continues to grow, and perpetual futures contracts also exhibit a similar positive momentum. The perpetual contract market has recently reached a premium peak - on November 12, it reached $1.59 million per hour (7-day average of $392,000 per hour) - reflecting strong speculative demand.
However, this level is still lower than the mid-March high, further confirming the hypothesis that the current uptrend is primarily driven by the spot market. Demand in the perpetual contract market is moderate but significant, highlighting that spot demand rather than leveraged speculation is the main driver of the price surge so far.
Price Discovery Phase
BTC has entered a new price discovery phase, with all circulating supply turning into profit. This chart shows the percentage of supply in profit, and the consecutive days this metric has exceeded 95%.
Historically, this phase tends to last around 22 days, after which an adjustment occurs, with over 5% of the supply falling below the initial acquisition price. The current uptrend has maintained this high-profit level for 12 consecutive days, highlighting strong market sentiment, but also suggesting the possibility of an adjustment in the future based on past patterns.
This chart examines the cumulative realized profits during the new ATH discovery phase, highlighting the scale of profit-taking activity. Historically, the monthly realized profits have been between $30 billion and $50 billion before demand exhaustion, typically signaling a cooling-off period.
Currently, since entering the latest ATH exploration phase, we have realized $20.4 billion in profits. While the profit-taking magnitude is significant, it remains below historical peaks, suggesting there is room for further upside before potential demand exhaustion.
Price Discovery Band
As we enter a new ATH discovery phase, it becomes crucial to identify the most effective price model to navigate this intense market activity. This chart shows the cost basis of new investors and the statistical upper and lower bounds (±1 standard deviation).
During the ATH discovery phase, as new investors enter the market at higher prices, BTC's price often approaches and tests the upper bound, driven by the strong demand momentum. Currently, BTC's price is $88,000, slightly below the upper bound of $94,900. Monitoring the proximity to these bands, especially the upper and middle bands, can highlight periods of robust market demand, reflecting the enthusiasm of new capital entering the market during the rebound phase.
The current average daily realized profit is approximately $1.56 billion, with long-term holders contributing $720 million, or 46% of the total.
Although profit-taking activity has increased, the cumulative realized profit is around half of the record during previous cyclical ATH periods (surpassing $300 million/day, with over 50% attributed to long-term holders). This further suggests that if demand continues to flow in, there may be room for further upside, and more selling pressure is needed before reaching the typical profit realization peak levels.
Conclusion
This briefing analyzes BTC's recent all-time highs, primarily driven by strong spot market demand, mainly through the US spot ETF. After the election, institutional investor interest has surged, with significant capital flowing into CME futures and ETFs, benefiting spot investment and propelling BTC into a new ATH discovery phase. Currently, over 95% of the circulating supply is in profit, typically followed by significant profit-taking.
At present, almost the entire circulating BTC supply is in a state of profitability, although the significant increase in profit-taking activity has offset this impact. While the actual profits of both short-term and long-term holders have increased, they remain below previous peaks, suggesting that many investors may be willing to wait for higher prices.
