Last week, the Bitcoin buying frenzy saw prices surge from last week's $78,000 to a high of $93,000, a 20% weekly gain, before retreating to $91,000. This also drove up Ethereum and other cryptocurrencies, which all saw 20% weekly gains, making it the most exciting week for the crypto market, driven primarily by institutional investors on Wall Street.
VX: TTZS6308
After Trump's victory, institutional investors were optimistic about the Trump administration's support for cryptocurrencies, investing in Bitcoin as a "Trump concept stock". In just one week, the Bitcoin spot ETF attracted nearly $5 billion in funds, but with prices nearing local highs, there was a net outflow of $400 million on Thursday, the third largest single-day outflow since the ETF's inception, indicating that some institutions have already taken profits and left the market, but the market frenzy is still ongoing.
Multiple technical indicators show that Bitcoin is overbought. In addition, as the market's FOMO (fear of missing out) sentiment is high, the pressure for correction is increasing, and Bitcoin has been experiencing a pattern of rallying and then pulling back, only to rally even higher, indicating that investors are still choosing to take profits and exit the market, although Bitcoin is still up 17% this week, it is still far from the market's $100,000 target.
The market is indeed overheated at the moment, especially with Musk's announcement of the establishment of "DOGE", which has driven Dogecoin to surge more than 20%, to some extent reflecting the exhaustion of short-term positive news, but the party is not over yet, as institutions and hedge funds continue to buy in, while retail investors are relatively calm this time, with institutions being relentless in chasing prices.
Goldman Sachs recently disclosed that it holds a $710 million Bitcoin position, a significant increase from August, when its holdings in Bitcoin-related spot ETFs were around $285 million, with more than half of that exposure through the BlackRock IBIT fund, which has grown 83% to $461 million, indicating that high-net-worth clients are all buying Bitcoin spot ETFs through Goldman Sachs.
It is worth noting that while institutional investors are frantically increasing their positions, retail investors and miners have started to sell. On-chain data shows that a large amount of Bitcoin has recently been transferred from whale wallets to centralized exchanges, possibly to realize the recent price surge. At the same time, the selling pressure from miners is also on the rise, with some Bitcoin from wallets dating back to 2015 being transferred to exchanges. Many retail investors have chosen to temporarily exit the market, waiting for a correction before re-entering.
Now, it is the institutions that have lost their minds and are frantically chasing the buying, and waiting for the "Trump trade" to subside may lead to another round of correction, at which point taking profits and exiting the market would be a good choice. Based on the various data, it is difficult to convince oneself that this kind of price surge is a healthy market phenomenon. Bitcoin is bullish in the long run, but the short-term surge is too fast.
As the price of Bitcoin rises, the selling pressure from long-term holders is also increasing. However, despite the increased selling pressure, the price of Bitcoin has not been significantly affected, as the ETF has absorbed all the Bitcoin being sold. This obvious selling pressure has not had a major impact on the market.
SEC regulatory easing is the next market theme
Last week, the US released the Consumer Price Index (CPI) as expected, but Bitcoin prices still fell after the data release, from $93,000 to $88,000, mainly due to the overheated price increase, with some traders choosing to take profits.
The market generally believes that a correction after a significant rally is inevitable, regardless of the inflation data. Currently, the market is driven by sentiment, fueled by the "Trump trade" euphoria, and Bitcoin's short-term trend is characterized by high volatility and sustained upward momentum. This week, the price range of Bitcoin exceeded $5,000, reflecting frequent chip exchanges, but the buying power remains strong.
As Trump is finalizing his cabinet appointments, market traders are focusing on "when Trump will appoint the SEC chairman", that is, to dismiss the current strict crypto regulator Gary Gensler. As soon as he steps down, it is expected that Trump will choose another crypto-friendly head of the regulatory agency, which will drive the rapid development of the US crypto industry. The market is now anticipating that Chris Giancarlo can take over the SEC chairmanship.
Former Chairman of the US Commodity Futures Trading Commission, Chris, is known as the "Crypto Dad". His biggest achievement during his tenure was clearly defining Bitcoin and Ethereum as "digital commodities" rather than securities, laying a critical foundation for the subsequent listing of spot ETF products. If he takes office, he may also classify more cryptocurrencies as "non-securities", triggering a surge in altcoins.
Although he has posted on social media X that he is not interested in taking on the SEC's regulatory issues, he has not directly refused. Since he was also the one who pointed out that Ripple's XRP is not a security, XRP has become a hot candidate for the next spot ETF, and there were previous rumors that Gary Gensler would resign, making the market optimistic that an XRP ETF may actually emerge, also causing its price to continue to rise.
Currently, the crypto market is in an excellent trading condition, and it is difficult for us to know whether a top has been reached, until Trump's cabinet appointment of the SEC chairman is finalized, the market will have ample imagination space to drive up the prices of the crypto market. Bitcoin is just the first major uptrend, and the subsequent rallies of altcoins and mid-cap cryptocurrencies can also be expected, with the fourth quarter of this year set to be a very fruitful season.
