Why is this bull run different from previous ones? Six charts reveal the driving forces behind Bitcoin's rise.

Original Title: These Six Charts Explain Why Bitcoin's Recent Move to Over $100K May Be More Durable Than January's Run

Original author: OMKAR GODBOLE

Original text compiled by: Ismay,

Editor’s Note: Bitcoin reached a new high on Pizza Day, seemingly a celebratory gift from fate to the crypto market. However, unlike previous bull markets, this time the new high for Bitcoin is a solo celebration for BTC, with minimal gains in the altcoin market. This article explains through six charts why Bitcoin's recent surge past $100,000 may be more sustainable than the spike in January. Key indicators such as the financial environment and inflows into stablecoins suggest that the foundation for this rally is more solid than the "double top" trend from December last year to January this year.

The key information is as follows:

Bitcoin is currently trading above $100,000, and the market environment indicates that the foundation for this increase is more solid than the "double top" pattern observed from December last year to January this year.

The current financial environment, the inflow of stablecoin funds, and the performance of spot ETFs are all more favorable for Bitcoin's trend than before.

Other key indicators have not shown signs of the overheating and speculative sentiment seen from the end of last year to the beginning of this year.

Bitcoin's current price is $106,546.31, regaining the $100,000 mark. As investors tend to be susceptible to "near-term bias", many may assume that this move will be a repeat of the period from December last year to January of this year, when the upward momentum quickly waned and the price quickly fell back into the six-digit range, eventually falling back to $75,000 at one point.

However, from the next six charts, the current Bitcoin market appears to be more robust than during the period from December to January, which means that the possibility of further increases 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 U.S. 10-year Treasury yield) and the U.S. dollar exchange rate.

Tight financial conditions will dampen risk appetite in financial markets and the real economy, while accommodative conditions will encourage more risky investment behavior. As of now, judging by the 10-year Treasury yield and the dollar index, the current financial conditions are significantly more accommodative than in January this year, which is conducive to the continued rise of bitcoin.

At the time of the report's release, the dollar index, which measures the value of the US dollar against a basket of major currencies, was at 99.60, down 9% from the January peak of 109.00. The yield on the 10-year US Treasury bond was 4.52%, a decrease of 30 basis points from the January high of 4.8%.

Although the 30-year U.S. Treasury yield has risen above 5%, returning to January levels, the market generally believes this is a positive factor for Bitcoin and gold.

There is still "gunpowder" in the market.

The two major stablecoins pegged to the US dollar—USDT and USDC—have reached a record total market capitalization of 151 billion USD. According to data from TradingView, this figure is nearly 9% higher than the average market capitalization of 139 billion USD from December of last year to January of this year.

In other words, there is more "dry powder" in the market now—referring to the potential funds that can be used to invest in Bitcoin and other crypto assets.

Strong directional bets

Since early April, when Bitcoin rebounded from a low near $75,000, this round of increase has been primarily led by institutions, which are betting on long positions rather than adopting arbitrage strategies.

This can be seen from two aspects: first, the Bitcoin ETFs listed in the United States continue to attract a large inflow of funds, and second, the open interest in Bitcoin futures at the Chicago Mercantile Exchange (CME) remains relatively moderate.

According to data from Velo, the nominal open interest of CME Bitcoin futures has surged to $17 billion, reaching a new high since February 20. However, this figure is still significantly lower than the peak of $22.79 billion in December last year.

On the contrary, according to data from Farside Investors, the cumulative fund inflow of the current 11 spot Bitcoin ETFs has reached a record of 42.7 billion dollars, far exceeding the 39.8 billion dollars in January of this year.

Signs of Speculative Frenzy Missing

Historically, the phase or cyclical peaks of Bitcoin (including from December last year to January this year) are often accompanied by a high level of speculative sentiment in the market, which tends to drive up the market capitalization of "non-serious" tokens like DOGE and SHIB.

However, there are currently no similar signs, and the total market capitalization of DOGE and SHIB is still far below the peak in January.

No signs of overheating

Although Bitcoin is currently close to its historical high, there is indeed a certain demand for long leverage in the perpetual contract market, which is understandable. However, the overall positions remain relatively light, showing no signs of excessive leverage accumulation or overheating of long positions, and the funding rate is also far below the peak in December last year.

The chart shows the funding rate, which is the cost of holding a perpetual contract. A positive value indicates that the bulls are willing to pay a premium for the position, i.e. the bulls pay the bears to maintain the position. This is often seen as an indicator of bullish sentiment in the market.

Implied volatility shows market stability

In terms of implied volatility, the Bitcoin market appears to be calmer at the moment. Deribit's DVOL index, which reflects the expected volatility over the next 30 days, is significantly lower than it was from December last year to January this year, and when the price peak occurred in March 2024.

A lower implied volatility suggests that traders do not expect significant fluctuations or major uncertainties, which is often a sign of an overheated market. Therefore, it also indicates that this upward trend is more rational and may be more sustainable.

"Original link"

：