- Bitcoin has surged by over 8% in the last week, reaching $68,955 on October 19, but trading volume has dropped by 60% in the past 24 hours.
- There has been a significant increase in apparent demand for Bitcoin, with U.S. spot ETFs net buying nearly 8,000 BTC recently, driving the recent price surge.
- Whales continue to accumulate Bitcoin, with their holdings now exceeding 670,000 BTC.
Bitcoin has experienced an 8% increase in the past week, nearing the $70K mark. This surge in price has reignited speculation about a possible new bull run in the cryptocurrency market.
The price of BTC rose from around $63,000 on October 13 to $68,955 on October 19, before settling at $68,241 today. However, this price movement has been accompanied by changes in trading dynamics and demand metrics, painting a mixed picture of market momentum.
Despite the rapid rise in Bitcoin’s price, the 24-hour trading volume has dropped by 60% to $14.71 billion. This divergence indicates a weaker trading environment, often signaling a period of market consolidation or profit-taking. Nevertheless, signs of institutional activity and broader demand suggest potential for sustained gains.
Demand Dynamics: CryptoQuant’s Insights
CryptoQuant, an on-chain analytics provider, has highlighted the role of “apparent demand” in driving lasting Bitcoin rallies.
Recent data shows a significant recovery in Bitcoin’s demand after months of stagnation. A surge in apparent demand by 177,000 BTC last week—the largest monthly growth since late April—preceded Bitcoin’s climb above $67,000, reaching a ten-week high.
Spot ETFs have played a key role in the demand surge, with net purchases of nearly 8,000 BTC on recent trading days—the highest since July—providing crucial liquidity in the market. This trend mirrors patterns observed in 2024, when daily spot ETF purchases averaged around 9,000 BTC, supporting Bitcoin’s rise to new highs.
In addition to ETF inflows, whale activity has also been a significant driver. Large holders outside exchanges and mining pools have increased their holdings to 670,000 BTC, maintaining an upward trend above the 365-day moving average.
This accumulation indicates that major market participants are positioning themselves for further gains, echoing behaviors seen in previous bull runs.
Echoes of 2020? Seasonality and Market Sentiment
Bitcoin’s resurgence is timely given its historical trend of performing well in the fourth quarter of halving years.
In 2012, 2016, and 2020, Q4 saw price surges of 9%, 59%, and 171%, respectively. As 2024 is also a halving year, the recent rally invites comparisons to the market behavior of 2020, when Bitcoin embarked on a sustained upward trajectory.
The role of whales in the current market environment resembles the post-COVID recovery in 2020, as indicated by CryptoQuant’s whale ratio. The behavior of these market movers before significant price surges in the past is being mirrored now.
Analyst Woominkyu highlighted on X: “Whales are positioning themselves for ‘FOMO’ by retail investors,” suggesting anticipation of a new wave of enthusiasm from novice traders.
Are We in a Bull Market or a False Dawn?
While the recent rally is viewed optimistically, the considerable drop in trading volumes prompts questions about the sustainability of the move. The decline in liquidity could signify a temporary cooldown period, especially as traders secure profits following a significant uptrend. Nonetheless, the convergence of demand growth, institutional inflows, and positive seasonal trends suggests that any pullbacks may be transient.
Despite the optimism, the market faces risks from factors such as macroeconomic conditions, regulatory changes, and geopolitical events that could impact sentiment and liquidity. The broader crypto market remains sensitive to shifts in investor outlook, particularly amidst rising interest rates and global economic uncertainty.
Signs Point to Optimism, but Caution Remains
Bitcoin’s recent price gains, boosted by renewed demand and institutional interest, have raised hopes of a new bull cycle. However, the dynamics of trading volume and the participation of large market players suggest a need for caution regarding potential volatility. With parallels drawn to past halving years offering historical insights, the next few weeks will be crucial in determining if this rally will sustain Bitcoin’s upward trajectory or if it’s just a brief surge.
Read Also: Bitcoin Surges as U.S. Spot ETFs Hit $20 Billion in Net Flows