Market ‘Pricing In A Higher Fair Value’ For Bitcoin As Price Discovery Continues

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As a seasoned researcher with years of experience tracking Bitcoin’s movements, I must admit that the recent surge is nothing short of astonishing. The crypto market has been on a rollercoaster ride since the US election, and Bitcoin’s performance has been particularly noteworthy.

Over the past week, Bitcoin (BTC) has shown exceptional growth, climbing approximately 30% from its level following the November 5 US election. This digital currency not only surpassed its previous all-time high set in March but also established a new record almost every day for the last seven days. Analysts at Bitfinex observed that, despite heightened speculative activity, the market has managed to stay relatively steady.

Bitcoin ‘Fair Value’ Priced In At Higher Levels

After Donald Trump’s win on Tuesday, the cryptocurrency market has experienced a significant surge, reaching a total value of approximately $3.05 trillion. Bitcoin has been spearheading this post-election bullish trend with a 30% price jump, approaching nearly $90,000 earlier today.

Based on findings from a Bitfinex Alpha report, it appears that the recent rally reflects investors’ optimistic response to the election results. They are apparently adjusting their positions in anticipation of possible economic incentives and policy changes.

At the height of March, the realized profit volume for Bitcoin hit a maximum of $3.1 billion. However, since that time, these realized profits have been steadily declining and are now at a balance point, or “equilibrium”.

According to the report, there’s been a shift in market conditions with regards to Bitcoin supply and demand, suggesting, together with the current price rise, that the market is now assessing a more elevated ‘fair worth’ for Bitcoin. Concurrently, Bitcoin’s price continues its exploration of value.

Additionally, it’s worth noting that when Bitcoin exceeded $70,000, the amount of profit-taking was notably less compared to previous occasions when Bitcoin was also trading within this price range. This is surprising given the overall rise in market activity and potential for profit-making.

According to Bitfinex analysts, this signifies the “arrival of a new wave of demand in the market,” supported by the rise in Bitcoin exchange-traded funds (ETFs) purchases following the elections. This also indicates that increased investor curiosity could potentially fuel additional growth momentum in the immediate future.

BTC Enters ‘A New Phase’

As a crypto investor, I’ve noticed an impressive surge in inflows for BTC ETFs, amounting to approximately $2.28 billion over just three days. This performance stands out as a notable jump compared to the pre-election period, where these crypto investment products experienced their second-largest single-day outflows due to risk-reduction strategies.

Based on information from CoinShares, Bitcoin ETFs ended the U.S. election week by attracting approximately $1.8 billion and began this week with a net inflow of around $1.1 billion. This strong performance suggests a renewed interest in Bitcoin as investors adapt to its changing price dynamics.

From March to August, the analysts at Bitfinex noted that the supply of the asset was quite large, while the buying demand wasn’t strong enough to take it up. However, the recent surge in demand indicates a significant change, as the interest to buy is now effectively counteracting the selling pressure at record highs and creating a more stable market situation.

Currently, it seems that as Bitcoin reaches new record highs, there’s less profit-taking due to the increased influx of new demand following the election. This additional demand is helping to counteract any remaining selling pressure, indicating a more robust market condition and the possibility of further price increases.

At present, the Open Interest (OI) for Bitcoin futures and perpetual contracts has surpassed its all-time high, standing at approximately $45.43 billion. This data implies a rise in speculative trading activity. However, it’s worth noting that despite this surge, the market remains comparatively steady because the OI and Bitcoin prices are balanced at higher than usual levels, suggesting equilibrium.

In the near future, it’s expected that Bitcoin might experience some consolidation, potentially leading to a dip around $77,000. This drop could fill the CME gap, providing Bitcoin with a stronger foundation for further growth to even greater heights.

As of this writing, Bitcoin is trading at $86,225, a 5% increase in the daily timeframe.

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2024-11-13 09:40