At the time of writing, Bitcoin was trading within a five percent range of its latest $52,547 ATH. While there is a lot of turmoil around, the fact of the matter is that whenever the price is in previously uncharted territory, there are doubts about the sustainability of the price rally.
It should be noted, however, that the latest price increase came on the back of Tesla’s $1.5 billion investment. Tesla’s investment also made it simpler for other institutions to invest in Bitcoin as it normalised the risk and cleared the psychological hurdles. In addition, the stocks of top companies that have invested in Bitcoin off their balance sheets have a high correlation of 0.98 with each other. These include Tesla, Microstrategy, Square, among others.
In addition, the Grayscale Bitcoin premium is back over 8 percent, so Bitcoin’s extended price rally comes from a variety of growth factors – Double-digit increases in top altcoins, the high season that broke out a week ago, and institutional investment through Grayscale’s GBTC that drives demand and uncertainty and supply shortage narrative.
The key here is that institutional interest has not yet reached its peak, even though it started back in September 2020 with a new ATH in Bitcoin’s price every other week. As for the BTC/USD trade volume on spot exchanges, considered to be one of the clearest indicators of the direction in which the price rally will take place, platforms such as CEX.IO saw a sharp increase in volumes after Bitcoin’s price had crossed $50,000 to hit the new ATH.
In reality, according to Konstantin Anissimov, Executive Director of CEX.IO, the market anticipates continuing BTC/USD price growth over the medium term.
To top the market action on spot markets, derivative exchanges have seen a surge in open interest and trading volumes since the price reached $50,000. Although trade volumes have not claimed the rate of previous ATHs, it is important to note that they are steadily increasing. In comparison, bitcoin’s inflows to exchanges are almost half of what it was at the beginning of February 2021.
A decline in inflows to spot exchanges seemed to suggest that there was no selling pressure on Bitcoin at the press time price stage. In reality, in the later hours of February 17, the price of the crypto reached a new $52,547 ATH, with price discovery seemingly uninterrupted. While there is doubt any time a price crosses a psychological barrier, there is also anticipation of a correction. And yet, current exchange-rate volatility and trade volumes point to continued price discovery and a path to a new ATH.
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