Editor's note:
This report is translated from glassnode's (Trumping to a New ATH). This article provides a detailed analysis of the motivations behind Bitcoin's recent breakthrough to new historical highs, especially emphasizing the dominant force of spot market demand in price increases. The post-election Bitcoin market was positively affected by the policy shift in the United States, attracting a large influx of institutional funds, as evidenced by the surge in open interest in U.S. spot ETFs and CME futures.
Through on-chain data, the article observes the highly profitable state of supply in the market and the firm positions of long-term holders, hinting at the potential of market momentum. Profit-taking activity is also growing as spot prices continue to approach highs, but current levels have not yet reached the peak of past all-time highs, indicating that the market still has room to rise further.
Highlights
This article explores the reasons for Bitcoin’s recent rise to new all-time highs, specifically analyzing how strong demand in the spot market compared to perpetual futures has driven this upward momentum.
We analyze the impact of the recent US elections on institutional inflows and highlight how US spot ETFs and CME futures open interest have surged due to the popularity of carry trading.
This article evaluates the exploration phase of new all-time highs, focusing on the percentage of supply that is profitable and market dynamics when sustained above 95% profitable conditions.
We drill down into on-chain cost base bands to track demand momentum and illustrate how approaching these cost bands can signal periods of strong market demand.
Finally, we examined realized profit levels and noted significant profit-taking activity, but current levels are below the peak of the previous all-time high, suggesting there is still room for continued growth.
💡 To see all the charts for this report, visit the "The Week On-chain" dashboard.
Post-election surge
After the results of the U.S. presidential election came out, the market unanimously believed that the Trump administration's policies were more friendly to cryptocurrencies, which brought positive signals to the crypto market and pushed Bitcoin to a new all-time high. This breakout from all-time highs is echoed across all major Bitcoin FX pairs.
This chart illustrates Bitcoin’s decline from all-time highs paired with various fiat currencies and gold (XAU). Notably, the Bitcoin to Turkish Lira (TRY) pair first reached an all-time high on June 26, 2024, ahead of other pairings, and then on November 6, 2024, almost all Bitcoin forex pairs reached new highs. All-time highs, Bitcoin alone remains about 19.9% below its all-time high against gold, despite Bitcoin’s current USD valuation of 88,600.
Bitcoin is about 19.9% below its all-time high against gold, although Bitcoin is currently valued at 88,600 USD.
Source: glassnode Live Chart - Bitcoin: Retracement of the BTC/FX asset pair from all-time highs
Historically, U.S. presidential elections have significantly impacted Bitcoin market performance, with significant changes in both price and realized market capitalization (representing the overall wealth invested in the Bitcoin network).
2016 election (Republican government):
Realized capital surged 20.3% pre-election and 55.5% post-election.
Prices rose 34.7% in the pre-election period and surged 124.6% in the months following the election.
2020 Election (Democratic Government):
Capital inflows grew by 16.5% before the election and by 196.3% after the election.
Prices rose 35.4% before the election and surged 306.8% after the election.
2024 elections (Republican government, so far):
Capital increased by 13.3% before the election and by a modest 2% after the election.
Prices rose 10.1% in the pre-election period and 27.9% in the post-election period (yet).
As a result, the response this cycle has been relatively mild compared to past elections, but still tends to be optimistic. The market is currently adjusting to possible crypto policy shifts in the coming years.
Source: glassnode Live Chart-Bitcoin: Price and Capital Changes During the U.S. Presidential Election
Bitcoin posted its biggest weekly gain ever, with a staggering 11,600 gain, driven by momentum from its recent breakout to all-time highs. The rally far exceeded the historical weekly gains and was almost five times the statistical upper limit of 1 standard deviation, indicating unprecedented bull strength.
This unusual price performance reflects market optimism, with participants viewing the expected regulatory environment as a catalyst for continued capital inflows.
Source: glassnode Live Chart-Bitcoin: Weekly Price Performance [USD]
Spot-led breakthrough
This chart shows the daily cumulative volume difference (CVD) on the Coinbase spot market, showing a significant increase in buyer pressure. Daily spot CVD recently hit 143 million, close to the previous peak of 152 million on March 13.
Every Bitcoin rally since July has been accompanied by strong buyer demand from Coinbase, showing strong demand in the spot market at one of the largest U.S. exchanges. This continued investor willingness to buy indicates that market participants are increasingly optimistic about digital assets and reinforces the spot-led nature of the current rally.
Source: glassnode Live Chart - Bitcoin: Spot Cumulative Volume Difference (CVD) [USD] - Coinbase (7-day moving average)
The recent rally has brought significant inflows into U.S. spot ETFs, with assets under management rising by $8.8 billion over the past 30 days, following strong buyer pressure observed in the Coinbase spot market. This increase exceeded the 6.9 billion increase in open interest in CME futures and showed the market's preference for physical exposure through ETFs.
The correlation between ETF inflows and CME open interest highlights the dominance of carry trades. However, stronger demand for ETFs reflects the market's preference for direct physical exposure during this upswing.
Chart source: glassnode Live Chart - Bitcoin: CME Open Interest and U.S. ETF Assets Under Management Movement (30 days)
Typically, continued demand for momentum in the spot market drives similar positive momentum in perpetual futures. Premiums in the perpetual market recently peaked at 1.59 million per hour (7-day average of 392,000 per hour), reflecting strong speculative demand.
However, this level remains below mid-March highs, reinforcing the assumption that the current rally is more spot-driven. Moderate but significant demand in the perpetual market suggests that spot demand, rather than leveraged speculation, is the main driver behind the price surge.
Chart source: glassnode real-time chart-Bitcoin: Long Premium [Hourly]
Explore the fever phase
Bitcoin has entered a new price exploration phase that puts all circulating supply in a profitable position. This chart shows the percentage of supply held in profit, and the number of days per month that it consistently exceeds 95%.
Historically, these manic phases typically last about 22 days before a pullback occurs, pushing more than 5% of the supply below the initial bid price. The rally has now maintained high profit levels for 12 days in a row, showing strong market sentiment but also hinting at the possibility of a correction based on past patterns.
Picture source: glassnode real-time chart-Bitcoin: historical high point exploration analysis (time)
This chart examines cumulative realized profits during the search for new all-time highs, highlighting the scale of profit-taking activity. Historically, monthly realized profits have typically ranged between 30 billion and 50 billion, with depletion of demand often triggering cooling periods.
Currently, we observe 20.4 billion in realized profits since entering the latest all-time high exploration phase. While profit-taking has been significant, it remains below its all-time peak, suggesting there is room for further upside before demand is exhausted.
Picture source: glassnode real-time chart-Bitcoin: historical high exploration analysis (profit taking)
price exploration stage
As we enter the exploration phase of new all-time highs, it becomes critical to identify the most effective price models to handle this elevated market activity. This chart shows the cost basis for new investors, along with upper and lower statistical bands (±1 standard deviation).
During the exploration phase of historical highs, Bitcoin prices often approach and test the upper band multiple times, driven by strong demand from new investors to enter the market at higher prices. Currently, Bitcoin price is at 87,900, approaching the upper band of 94,900. Observing close to these bands, especially the upper and middle bands, can mark periods of strong market demand, reflecting the enthusiasm of new funds to enter the market during the rebound phase.
Currently, Bitcoin spot price is at 87,900, just shy of the upper band at 94,900. Monitoring conditions near these bands, especially the upper and middle bands, can show that periods of strong demand are waning and suggest that existing holders may intensify selling pressure at higher prices.
Picture source: glassnode real-time chart-Bitcoin: short-term on-chain cost basis band [hourly]
Currently, the profit trading volume is approximately 1.56 billion per day, with long-term holders contributing 720 million, accounting for 46% of the total.
Despite increased profit-taking activity, cumulative realized profit trading volume is about half of the previous cycle high (when it was over 3 billion daily, with over 50% coming from long-term holders). This again suggests that if demand continues to flow in, the market may still have room to move higher, requiring greater selling pressure to reach typical high profit realization levels.
Source: glassnode real-time chart-Bitcoin: Long-term/short-term holders realize profits [USD]
Summary and conclusion
This newsletter explores Bitcoin’s recent new all-time highs, driven primarily by strong demand in the spot market, particularly through U.S. spot ETFs. The post-election surge in institutional interest and significant capital inflows into CME futures and ETFs favored spot exposure pushed Bitcoin into a stage of exploration for new all-time highs. Over 95% of the circulating supply is currently in profit, often followed by significant profit taking.
Nearly all of the circulating Bitcoin supply is now in profit, despite a significant increase in profit-taking activity. Realized profits for both short-term and long-term holders have increased, but are still below the previous all-time high peak, which may mean that many investors are willing to wait for higher prices.
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[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
"The Week Onchain" Week 46: Affected by the election effect, Bitcoin enters a feverish period! "This article was first published in "CryptoCity"
