Key Takeaways
Bitcoin’s market cap has been growing, persuading more investors that it may be a legitimate asset to invest in. As it extends higher, making new all-time highs, investor euphoria is bound to pick up. However, it is not at peak levels yet, meaning there’s more room for growth.
Despite some significant correction at press time, Bitcoin [BTC] has climbed to an even higher position in the list of the largest assets by market capitalization.
Currently, it holds the 6th rank, with a $2.385 trillion market capitalization. The gains of the past week pushed it beyond Alphabet [GOOG] at $2.2 trillion.
Such sustained growth may be a positive sign for Bitcoin. It legitimizes the world’s largest crypto in the eyes of the general public. Institutional investment has been strong too. Strategy [MSTR] acquired another 4,225 BTC on Monday, 14 July, HODLing 601,550 BTC.
Bitcoin spot ETF inflows recorded $1 billion on back-to-back days between 10-11 July too. This record was last matched in January 2024, when the spot ETFs were newly launched. AMBCrypto examined on-chain metrics to understand where Bitcoin could go from here.
We found that there were some warning signs, which would explain the press time corrections in Bitcoin’s price. And yet, the market largely appeared healthy enough to climb further.
Coinbase Premium and Futures data show rally may be set to continue
Coinbase is a centralized U.S. crypto exchange. The Coinbase Premium Index measures the percentage difference in BTC prices on Coinbase (USD pair) versus Binance (USDT pair). A positive difference would mean Bitcoin demand on Coinbase was higher, signaling U.S investor interest.
This has been the case for the past two months. In the past, the March 2024 and November 2024 rallies were accompanied by high Coinbase premiums.
At the time of writing, the premium was not as high – A sign that peak euphoria has not yet set in.
In a post on X, crypto analyst Axel Adler noted that bull dominance has been rising too. At press time, the net long positions on Bitcoin Futures on centralized exchanges seemed to be rapidly approaching the $100 million-mark. Over the past couple of days, this net long position had cooled down, even as the price remained above the $116k-mark.
This may be a sign that buyers can drive the price higher in the short term, despite some unexpected corrections.
There appeared to be two warning signs for Bitcoin traders. The first was the taker buy/sell ratio being skewed extremely in favor of the buyers. The 7-day moving average of the ratio was at 1.03, at the time of writing. Over the past year, the 7DMA’s venture to 1.04 has been met by a short-term pullback, or sideways price action, though it hasn’t often halted a rally.
Another warning sign was the flow of stablecoins out of exchanges. It may be a signal of falling buying power in the market.
Overall, investors and traders can remain excited, especially since the rally is not yet done. However, there may be a chance for short-term volatility. Investors wouldn’t mind it, but it could hurt traders, especially leveraged ones.
