Bitcoin smoothly climbed to $89,465, setting a new historical high. Bloomberg senior ETF analyst Eric Balchunas stated that the assets of the U.S. Bitcoin spot ETF have reached two-thirds of the gold ETF, suggesting that a 'golden cross' could form between the two soon. Technical analysts emphasized that despite Bitcoin hitting a new high, there does not seem to be any signs of overheating technically.
Eric wrote: 'The assets of the U.S. Bitcoin spot ETF have now reached $84 billion, equivalent to two-thirds of the gold ETF's asset scale. Suddenly, it is very likely that they could surpass gold on the anniversary.'
He indicated that he originally expected this to take 3-4 years.
According to statistics from the U.S. Decision Desk HQ (DDHQ) regarding the 2024 presidential election results, after Trump won the presidency, the Republican Party also controlled the House of Representatives and the Senate.
This has once again triggered the 'Trump Trade', with the dollar index and Bitcoin being the biggest winners, while gold continues to oscillate at low levels.
Currently, the signal investors are eager to grasp is: Can the price of the coin still trade after soaring to a new high of $89,465?
CryptoQuant analyst Aytekin shared a comprehensive analysis of tools for assessing Bitcoin market temperature, focusing on distinguishing useful indicators from potentially misleading ones.
He mentioned that investor concerns typically focus on whether Bitcoin can reach new highs and when it might peak in the market. To address these questions, he emphasized two metrics he is less focused on for measuring market sentiment: open interest and profit supply indicators. The analyst further pointed out that establishing a causal relationship between price and open interest remains challenging, as historical data indicates that price fluctuations often drive changes in open interest levels, rather than the other way around.
Additionally, the analyst revealed that with the growth of the futures market and the adoption of Bitcoin, open interest levels are expected to be higher in the coming years.
Aytekin believes another potentially misleading indicator is 'profit supply', which measures the profitability of the entire network. This indicator is related to Bitcoin's nominal price and typically leads to profitability soaring to over 95% during historical peaks (ATH).
However, he pointed out that if extreme profitability continues to trigger massive sell-offs, reaching new highs will be a problem. Conversely, he suggested considering how long these high-profit levels can last and noted that historically, this situation can last up to a year during broader market cycles.
In contrast, the analyst emphasized two indicators he believes are valuable for tracking Bitcoin market sentiment: financing rates and the spent output profit ratio (SOPR). Financing rates track the costs paid between long and short positions in the futures market and serve as a tool to identify 'excessive' market optimism.
Aytekin stated that monitoring this metric provides better insight into market conditions than open interest. So far, he noted that financing rates have not indicated extreme market behavior.
He revealed that the SOPR indicator can clearly define profit trends, especially when smoothed using a 30-day moving average.
Aytekin emphasized that profitability itself does not pose a risk unless it aligns with supply changes in the market. He revealed that the current SOPR levels indicate that while the market shows signs of profitability, there are no signs of overheating.
