After experiencing some negative moves over the weekend, the trend of Bitcoin on the daily chart reversed. According to Press Time, Benchmark Crypto traded at $ 63,136 with a 3.8% gain on the 24-hour chart.
The rally was driven by rising institutional demand as the first Bitcoin-linked exchange traded funds (ETFs) rolled out in the United States. Both products surpassed the launch of the Gold ETF, reaching $ 1 billion in less than 3 days, recording a trading volume with ProShares products.
$ BITO Today the total volume is around $ 1b (current $ 993m but the trade is still going on). Easily the biggest day of any ETF in terms of ‘natural’ volume. It accounts for more than 99.5% of all ETFs (including some large ones) $ DAY, ARKK, SLV) It has denied our expectations .. pic.twitter.com/rWIPSAJboT
– Eric Balchunas (EricBalchunas) October 19, 2021
It has driven the Chicago Mercantile Exchange (CME) open interest in the stratosphere, setting a new all-time high of $ 5.44 billion for futures contracts, a Glasnode report indicates. CME OI only increased 265% in October 2021, as seen in the chart below.
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The derivatives market has heated up across the board as Bitcoin has been higher and the fund rate has been positive. This triggered a FOMO effect that led to a correction as over-leverage traders shook in the past day.
Bitcoin seems to be recovering quickly and holding 60,000 as critical support, but as Glasnod noted, an overheated futures sector has put the entire market at risk of further downward price action.
(…) The fund rate remains at the same level as was observed before the flush out in early September. With futures open interest near all-time highs, the risk of a worse side to clearing more leverage remains in the game.
Bitcoin investors expect more profits
In support of the current optimistic general sentiment in the crypto market, Glassnode noted a decline in activity by long-term holders. These investors have been taking profits for the last 2 weeks after the savings period.
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As the research firm explained, Bitcoin long-term holders (LTH) have shown a general behavior as the value of BTC has entered into price discovery. As the chart below shows, there seems to be an inverse relationship between the total BTC supply held by LTH and the price of this cryptocurrency.
Whenever the cost of LTH is reduced, the price of Bitcoin reverses in a huge rally that can be seen in late January and early February 2021.
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In consolidating LTH’s behavior, while already resuming their BTC collection with short-term holders (STHs), Glassnode concludes that the overall feeling of Bitcoin reaching new heights is:
(…) STH has stopped spending time on this revision. With LTH supplies already starting to recover, the most likely explanation is that most moneylenders are still waiting and waiting for higher prices.