Editor's Note: Bitcoin broke a new high on Pizza Day, like a celebratory gift from destiny to the crypto market. However, unlike previous bull markets, this Bitcoin new high is only a solo celebration for BTC, with the Altcoin market not rising significantly. This article explains through six charts why Bitcoin's recent breakthrough above $100,000 may be more sustainable than the wave of increase in January. Financial environment, stablecoin inflows, and other key indicators suggest that this round of increase has a more solid foundation compared to the "Double Top" market from December last year to January this year.
Key information as follows:
Bitcoin is currently trading above $100,000, and market conditions indicate that this rise has a more solid foundation compared to the "Double Top" market from December last year to January this year;
The current financial environment, stablecoin fund inflows, and spot ETF performance are all more favorable to Bitcoin's trend compared to before;
Other key indicators also do not show signs of overheating and speculative sentiment as seen at the end of last year and the beginning of this year.
Bitcoin's current price is $106,546.31, having returned above the $100,000 mark. Due to investors often being influenced by "recency bias", many might believe this trend will replay the situation from December last year to January this year - when the upward momentum quickly weakened, and the price quickly fell back to the six-digit range, ultimately dropping to $75,000.
However, from the following six charts, the current Bitcoin market appears more robust compared to the period from December to January, which means its potential for further increase is also higher.
"Financial conditions" refer to a series of economic variables including interest rates, inflation, credit availability, and market liquidity, which are typically influenced by macro indicators such as benchmark government bond yields (like the US 10-year Treasury yield) and the US dollar exchange rate.
Tight financial conditions suppress risk appetite in financial markets and the real economy, while loose conditions encourage more risk investment behaviors. As of now, from the 10-year Treasury yield and US dollar index, the current financial environment is clearly more relaxed compared to January this year, which is favorable for Bitcoin's continued rise.
At the time of reporting, the US Dollar Index, which measures the dollar's exchange rate against a basket of major currencies, was 99.60, down 9% from the January high of 109.00. The US 10-year Treasury yield was 4.52%, down 30 basis points from the January high of 4.8%.
Although the 30-year Treasury yield has risen above 5%, returning to January levels, the market generally believes this is positive for Bitcoin and gold.
More "Dry Powder" in the Market
The total market cap of the two major stablecoins priced in US dollars - USDT and USDC - has reached a record $151 billion. According to TradingView data, this value is nearly 9% higher than the average market cap from December last year to January this year (139 billion).
In other words, there is now more "dry powder" in the market - potential funds available for investing in Bitcoin and other crypto assets.
Strong Directional Bets
Since Bitcoin rebounded from near $75,000 in early April, this round of increase has been mainly driven by institutions, with bets primarily long rather than arbitrage strategies.
This can be seen from two aspects: first, US-listed spot Bitcoin ETFs continue to attract significant capital inflows, and second, the CME Bitcoin futures open interest remains relatively moderate.
According to Velo data, the nominal open interest for CME Bitcoin futures has risen to $17 billion, a new high since February 20. However, this value is still significantly lower than the peak of $22.79 billion in December last year.
In contrast, according to Farside Investors, the cumulative capital inflow of the current 11 spot Bitcoin ETFs has set a record, reaching $42.7 billion, far higher than the $39.8 billion in January this year.
Lack of Speculative Frenzy Signs
Historically, Bitcoin's periodic or cyclical tops (including from December last year to January this year) are usually accompanied by high market speculative sentiment, which often drives up the market cap of "non-serious" tokens like Doge and SHIB.
However, no such signs are currently present, with Doge and SHIB's total market cap still far below January's peak.
No Overheating Signs
Although Bitcoin is currently near its historical high, there is indeed some long-side leverage demand in the perpetual contract market, which is understandable. However, the overall positions remain light, showing no signs of excessive leverage accumulation or long-side overheating, and the funding rates are far lower than the peak in December last year.
The chart shows the funding rate, which is the cost of holding perpetual contracts. A positive value indicates that longs are willing to pay a premium to maintain their positions, meaning longs pay shorts to continue holding positions. This is usually viewed as a bullish sentiment indicator.
Implied Volatility Shows Market Stability
From the implied volatility perspective, the current Bitcoin market appears calmer. Deribit's DVOL index (reflecting the expected volatility for the next 30 days) is significantly lower than during the period from December last year to January this year, and also lower than the price peak in March 2024.
Lower implied volatility means traders do not expect significant volatility or major uncertainties, which is typically a sign of an overheated market. Therefore, it also indicates that this upward trend is more rational and may be more sustainable.
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