HomeCryptoBitcoinAnalysis of the price pump of Bitcoin (BTC)

Analysis of the price pump of Bitcoin (BTC)

Yesterday, there was a real pump in the price of Bitcoin (BTC): however, the analysis reveals that it is an organic pump, and most likely not artificial. 

Bitcoin had been trying to break through the $53,000 wall for days, and as soon as it gave way, it headed towards the next wall, which is currently around $57,300.

Indeed yesterday the pump stopped right below that threshold, above $57,200, and this suggests that it was not an organized pump.

The role of ETFs in analyzing the price of Bitcoin (BTC)

Yesterday was a record day for Bitcoin ETFs, which set all-time high daily trading volumes at $2.4 billion.

Although this record was only slightly higher than that of the launch day (January 11), it was still double the level of the previous days. 

In addition, yesterday there were also large daily capital inflows towards these ETFs, with $519 million net of outflows from the Grayscale ETF.

Since last week and the previous one had already seen large inflows of capital, it is easy to understand why the price of BTC increased yesterday. 

The FOMO on Bitcoin (BTC) price analysis

However, there is a fact that seems to suggest that an important role in yesterday’s pump was played by retail investors. 

It should be remembered that Bitcoin ETFs are also tools used by retail investors, so the above data is not at all in contrast with the hypothesis that retail investors may have played a role in yesterday’s pump.

The point is that there has been a real surge in searches on Google for the word Bitcoin, with hourly peaks almost double compared to those of last week.

This data seems even higher than that of mid-February, when the price broke through the $50,000 wall, although it is still lower than that of January 11th. 

So it’s possible that yesterday a little FOMO (Fear Of Missing Out) started to spread in the Bitcoin market, but not as much as the day of the ETF’s stock market debut.

In light of this, it seems clear that the interest of retailers in Bitcoin yesterday was significant, probably enough to induce someone to buy despite the rising prices, but not yet to reach real peaks. 

The $200,000 target hypothesis

At this point, according to the graphics expert Peter Brandt, Bitcoin’s target for 2025 would be to reach as high as $200,000.

It must be said, however, that if the FOMO were to increase further, sooner or later the sentiment would reach such heights that it could no longer go beyond. 

For example the Fear&Greed index yesterday skyrocketed to 79 out of 100, which is a very high level but still not a record.

Peter Brandt is the CEO of Factor, as well as an analyst with over four decades of experience, and has raised his estimate for the peak of the price of Bitcoin next year from $120,000 to $200,000.

The fact is that yesterday Bitcoin rose above $55,000, exiting the channel of the last 15 months identified by the trend lines connecting the lows of November 2022 with the highs of April 2023 and January 2024. 

Fourth halving coming soon

However, it should not be forgotten that in the second half of April there will be the halving.

It is possible that the recent pumps are due to the approach of this event, and that once it has occurred, a sell the news could be triggered. 

Actually, since the FOMO is already coming now, just under two months from the halving, it is even possible that a first retracement may occur by April, although as of today there is no sign that this could happen soon. 

Usually, however, while February is often a good month for Bitcoin during positive years, March instead has been characterized by retracements in the past, such as last year. It should be remembered that the dump in March 2023 was due to the banking crisis in the USA, an external event that may not be repeatable this year. 

Short sellers’ losses

Yesterday was a black day for BTC short sellers. 

Indeed, leveraged bets against Bitcoin have resulted in losses of over $150 million in just the last 24 hours.

Furthermore, the open interest has risen from 48 to almost 54 billion dollars, showing an increase in bullish bets.

The 10% increase in the price of BTC has caused forced liquidations of about $285 million, of which $211 million were from short positions. In total, 74,800 people were liquidated, making it the largest single liquidation order on Binance.

This tough defeat for short sellers may have also changed the market trend, although the beginning of FOMO could mean a new change in the opposite direction in a few days or weeks. 

Arbitrage opportunities

According to Velo Data and CoinGlass, the annualized funding rate of perpetual futures on BTC listed on Binance has exceeded 100% for the first time in over a year. On Bybit, they have risen to 95%, and on Deribit to 56%.

Perpetual futures with no expiration date use financing rates to keep their prices in sync with those of the underlying asset on the spot market, and a positive financing rate indicates that perpetual futures are traded at a premium to the spot price. 

This is effectively the description of a positive scenario, in the short term, and also implies that the surge in financing rates opens up profit opportunities for arbitrageurs.

Indeed, arbitrage allows to profit from price discrepancies between different markets, as in this case between the perpetual futures market and the spot market, and a high financing rate means that there is a price discrepancy between these two markets. 

In such a scenario, those who sell perpetual futures short and buy the underlying asset in the spot market can actually pocket the premium. 

Marco Cavicchioli
Marco Cavicchioli
Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded ilBitcoin.news and the Facebook group" Bitcoin Italia (open and without scam) ".