- Bitcoin has risen over 8% in the past week, reaching $68,955 on October 19, but trading volume has decreased by 60% in the past 24 hours.
- Apparent demand for Bitcoin has seen a significant spike, with spot ETFs in the U.S. net buying nearly 8,000 BTC recently, a key driver behind the recent price increase.
- Whales have continued to accumulate Bitcoin, with their holdings now exceeding 670,000 BTC.
Bitcoin has gained over 8% in the past week, approaching the $70K mark. Bitcoin’s price surge over the past week has reignited speculation about a potential new bull run in the cryptocurrency market.
BTC price increased from around $63,000 on October 13 to $68,955 on October 19, before settling at $68,241 as of today. However, this price action comes with notable shifts in trading dynamics and demand metrics, offering a mixed picture of market momentum.
The rapid appreciation in Bitcoin’s price coincides with a sharp decline in 24-hour trading volume, which dropped by 60% to $14.71 billion. This divergence suggests a less robust trading environment, often seen as a precursor to market consolidation or profit-taking. Yet, there are signs that institutional activity and broader demand could be laying the groundwork for more sustained gains.
Demand Dynamics: CryptoQuant’s Insights
On-chain analytics provider CryptoQuant recently highlighted the role of “apparent demand” in driving sustainable Bitcoin rallies.
According to their data, Bitcoin’s demand has shown a significant recovery after months of stagnation. The latest surge saw apparent demand jump by 177,000 BTC last week—the most substantial monthly growth since late April. This rise in demand preceded Bitcoin’s move above $67,000, reaching a ten-week high.
Spot exchange-traded funds (ETFs) have been a key factor behind the demand growth. With net purchases of nearly 8,000 BTC on recent trading days—the highest since July—spot ETFs have become a critical source of liquidity in the market. This trend follows a pattern observed earlier in 2024 when daily spot ETF purchases averaged around 9,000 BTC, supporting Bitcoin’s ascent to new highs.
In addition to ETF inflows, whale activity has been another notable driver. According to CryptoQuant, large holders outside exchanges and mining pools have expanded their holdings to 670,000 BTC, maintaining an upward trajectory above the 365-day moving average.
This accumulation suggests that key market participants are positioning themselves for further upside, echoing similar behaviors seen in prior bull runs.
Echoes of 2020? Seasonality and Market Sentiment
The timing of Bitcoin’s resurgence is especially relevant given the historical tendency for the cryptocurrency to perform well in the fourth quarter of a halving year.
In 2012, 2016, and 2020, Q4 saw respective price increases of 9%, 59%, and 171%. As 2024 is also a halving year, the recent rally is prompting comparisons to the market behavior of 2020 when Bitcoin’s price entered a sustained upward trajectory.
The role of large holders—often referred to as “whales”—in the current market environment is drawing parallels to the post-COVID recovery in 2020. CryptoQuant’s whale ratio, calculated using a 30-day moving average on spot exchanges, suggests that the behavior of these market movers mirrors that seen before significant price surges in the past.
Analyst Woominkyu, a verified author on CryptoQuant, noted on X: “Whales are ready to welcome ‘FOMO’ by dumb money,” implying that these players may be anticipating a new wave of retail investor enthusiasm.
Are We in a Bull Market or a False Dawn?
While the recent rally has been met with optimism, the sharp drop in trading volumes raises questions about the underlying strength of the move. The contraction in liquidity could indicate a short-term cooling-off period, especially as traders lock in profits after a substantial run-up. However, the convergence of demand growth, institutional inflows, and positive seasonal trends could mean that any pullbacks may be temporary.
Still, the market is not without risks. Factors such as macroeconomic conditions, regulatory developments, and geopolitical events could impact sentiment and liquidity. The broader crypto market remains sensitive to shifts in investor outlook, particularly in the context of rising interest rates and global economic uncertainty.
Signs Point to Optimism, but Caution Remains
Bitcoin’s recent price gains, buoyed by renewed demand and institutional interest, have stirred hopes of a fresh bull cycle. However, the dynamics of trading volume and the role of large market participants suggest that investors should remain cautious of potential volatility. With comparisons to previous halving years offering a historical guide, the next few weeks will be critical in determining whether this rally has the staying power to usher in a new era of Bitcoin highs or if it is merely a short-lived surge.
Read Also: Bitcoin Surges as U.S. Spot ETFs Hit $20 Billion in Net Flows
