Bitcoin broke past $52,000 early on Thursday morning.
At the time of writing, the Bitcoin price is $52,227.86. That’s a 1.3% gain from yesterday and 17% increase from last week. Volume has climbed steadily this week, with $37 billion worth of BTC having changed hands in the past day, according to CoinGecko data.
There’s also lots to watch in Bitcoin derivatives markets. Since yesterday, the open interest in Bitcoin contracts has climbed to $24 billion—that’s within spitting distance of the $24.27 billion all-time high that the market last saw in April 2021, according to CoinGlass data.
Source: Screenshot of Bitcoin open interest on CoinGlass
Open interest refers to the notional value of outstanding derivative contracts, like futures and options, that investors use to speculate on future price movements. It’s one of the ways that analysts gain insight into investor sentiment because high open interest signals intent to enter or remain in the market, liquidity, or expectations for upcoming volatility.
As it stands, the growing open interest has been accompanied by increased liquidity on exchanges, as noted by to blockchain analytics firm Kaiko. In fact, the firm noted on Twitter that liquidity is growing at its fastest pace in years.
High liquidity tends to be a good sign for traders because it signals that an asset can easily be bought and sold without causing big price swings. It also shrinks the spread, or the difference between the prices to buy and sell an asset. The lower the spread, the lower transaction fees and slippage tend to be.
The other factor to consider is how much BTC is flowing into Bitcoin ETFs and therefore being taken off the market. Currently, there’s roughly 10 times more BTC being held by custodians to back Bitcoin ETF shares than is entering the market through the Bitcoin mining process, Gemini co-founder Cameron Winklevoss pointed out earlier this morning on Twitter.
Bitcoin ETFs are taking 10x more bitcoin off the market than are being minted daily. If these inflows hold through the Halvening, then Bitcoin ETFs will be taking 20x more off the the market than the daily mint. I like where this is going.
He also pointed out that when the rate at which new BTC enters the market drops by 50% after the halving in April, it could be very bullish for the price of Bitcoin. The Bitcoin halving occurs roughly every four years and cuts the rewards given to Bitcoin miners in half. This next halving will trim the reward from 6.5 BTC to 3.25 BTC.
“I like where this is going,” Winklevoss added.
So far, Wall Street has shown a growing appetite for the newly approved Bitcoin ETFs. Just yesterday, BlackRock’s iShares Bitcoin Trust (IBIT) saw inflows of $500 million and now has roughly $5 billion worth of assets under management.
The rapid pace of inflows for IBIT puts the fund in the top 7% of all ETFs, noted Bloomberg Intelligence analyst Eric Balchunas.
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