Institutional capital fuels crypto rally amid profit-taking trends — Bitfinex

The crypto market reached a new all-time high of nearly $3.5 trillion, with Bitcoin (BTC) leading the charge due to a rapid influx of institutional capital.

Additionally, the market share of altcoins excluding Ethereum (ETH), known as Total 3, reached its highest level in over three years.

According to a recent report by Bitfinex, capital inflows since the pre-election low of $66,880 just 20 days ago are unparalleled, driving Bitcoin to consistent all-time highs. BTC peaked at $99,334 before a slight correction settled it at $95,611 over the weekend.

Despite profit-taking by long-term holders, Bitcoin’s ability to maintain its upward trajectory is supported by demand from new investors, mainly through exchange-traded funds (ETFs). 

In the past week alone, net inflows into US spot Bitcoin ETFs have exceeded $3.35 billion. 

However, as institutional trading typically pauses over the weekend, the market saw a price drop due to a mismatch between supply and demand. As Bitcoin approaches the significant $100,000 mark, monitoring daily ETF inflows is essential, as any slowdown could indicate waning interest at these high price levels and potentially signal a larger correction.  

Furthermore, the broader altcoin market, represented by the Total3 Index (excluding Bitcoin and Ethereum), also hit new cycle highs, increasing by 23.2% — wthe most significant move since April 2021. 

This surge indicates growing investor interest in altcoins, potentially driven by market sentiment and evolving regulatory developments. 

Large-cap altcoins like Solana (SOL) have achieved new all-time highs, outperforming Bitcoin on significant timeframes and marking the onset of what is commonly referred to as “alt season,” a period when altcoins display substantial upward movements.

Countering sell pressure

This fresh institutional demand has been crucial in absorbing selling pressure. 

Historically, when Bitcoin reaches new all-time highs in a halving year, long-term holder (LTH) wallets — typically accumulating during bear markets—become more active.

The average acquisition price for these holders is currently $24,912, providing substantial unrealized profits at current price levels. With Bitcoin surging, LTHs have been offloading holdings, with over 461,000 BTC spent since the price broke the previous all-time high of $73,666 last month.  

The Long-Term Holder Spending Binary Indicator, which tracks the percentage of days where LTH spending surpasses buying, shows intensified selling pressure. 

However, the current distribution level remains less severe than during previous peaks in March 2021 and March 2024, suggesting that the sell-off is still relatively controlled. Typically, when this indicator reaches such levels, it forecasts a potential price top within three to four months if sustained.  

Surpassing traditional assets

This recent surge marks Bitcoin’s third-largest trough-to-peak move since February 2020. Given Bitcoin’s increased market cap, the capital required to achieve similar percentage gains has grown substantially. 

As a result, if Bitcoin maintains its current momentum, it could represent the most significant deviation from the median monthly performance for the entire year.  

The report highlighted that BTC’s recent ascent has positioned it as the seventh-largest tradeable asset by market cap, surpassing major entities like Saudi Aramco. Additionally, Bitcoin’s 56.9% gains quarter-to-date outperformed traditional safe-haven assets, such as gold and silver, which presented returns of 5.3% and 8.1% in the same period, respectively.

Potential for corrections

While the market remains bullish, a minor correction or period of consolidation is expected, particularly in light of upcoming macroeconomic events like the release of the US Consumer Price Index and the Federal Open Market Committee minutes. 

Additionally, with volatility and liquidations increasing—totaling over $500 million across all crypto on multiple days recently — a balancing period seems likely.  

The report also pointed out that funding rates for large-cap cryptocurrencies have been climbing, suggesting the potential for increased volatility and substantial price swings. 

While Bitcoin’s ascent continues, altcoins could see magnified reactions to any BTC corrections, making it a critical time for investors to monitor market dynamics closely.

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