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- Bitcoin strongly sustaining above its all-time high could be the beginning of a new parabolic price rally going ahead.
- Analysts attribute the rally to the soaring demand for physically-backed ETFs amid a low market depth backdrop.
The world’s largest cryptocurrency Bitcoin (BTC) has been on an unstoppable price rally while hitting a new all-time high past $73,000 earlier today, as reported by Crypto News Flash. Market analysts believe that this is just the beginning of a massive parabolic rally for Bitcoin that is in the making.
In recent market analyses, cryptocurrency experts have emphasized Bitcoin’s increasing on-chain metrics, hinting at the possibility of another significant bull run. Notable figures in the crypto analysis community, including on-chain analyst Axel and CryptoQuant CEO Ki Young Ju, have contributed to a growing belief that Bitcoin might be gearing up for its next major price surge.
Axel, known for his insightful analysis of Bitcoin’s on-chain data, drew attention to the UTXO Profit/Loss (P/L) Supply Ratio Momentum, a sophisticated metric assessing short-term versus long-term profitability based on Bitcoin transactions. According to Axel, this metric is calculated by dividing the average weekly profit/loss ratio by the yearly average.
He pointed out that there have been two notable spikes in this momentum over the past decade, and he noted that a third spike appears to be emerging presently. Axel explained that these spikes closely align with periods of market growth, indicating potential mid-bull rally phases that could result in significant profits for investors.
In reaction to Axel’s analysis, Ki Young Ju, CEO of CryptoQuant, shared his viewpoint, further affirming the optimistic stance. According to him, BTC’s on-chain momentum suggests a significant influx of new capital, signaling the commencement of the next parabolic bull run for Bitcoin. As per the Crypto News Flash report, the BTC price could be on its way to hitting $100K.
On-chain momentum indicates enough fresh capital inflow to initiate the next #Bitcoin parabolic bull run. https://t.co/BrvWO1dbc4
— Ki Young Ju (@ki_young_ju) March 13, 2024
Bitcoin ETFs Lead Fresh Capital Inflows
Manuel Villegas, a digital assets analyst at Swiss private bank Julius Baer, explained the rally’s causes, stating, “The demand for physically-backed ETFs is surging against a backdrop of low market depth.” As issuers acquire significant amounts of Bitcoin to back their ETFs, the overall circulating supply of the token has started to decrease.
Villegas noted that Bitcoin’s weekly issuance of approximately 6,300 tokens is significantly smaller when compared to the demand for tokens from ETFs in recent weeks, which amounts to about 40,000 tokens.
On the other hand, as Bitcoin surges to unprecedented levels, there is a surge in demand for investment options offering leveraged exposure to the digital asset.
Futures-based exchange-traded funds (ETFs), such as VolatilityShares’ 2x Bitcoin Strategy ETF (BITX), are experiencing remarkable inflows, rivaling those of traditional spot Bitcoin ETFs. BITX alone attracted $630 million in net monthly inflows, trailing only behind BlackRock and Fidelity, according to data compiled by K33 Research.
Furthermore, futures-based Bitcoin ETFs now boast an all-time high exposure equivalent to 83,300 tokens, with leveraged Bitcoin ETFs representing nearly a quarter of the open interest on CME, a major marketplace for crypto derivatives. K33 Research notes that futures premiums on the platform have surged to around 20% amid record-breaking open interest. It added:
“The massive uptick in flows to 2x leveraged BTC ETFs illustrates the huge demand for leveraged long exposure in BTC of late and is consistent with the increased risk appetite witnessed in BTC derivatives”.
