-
Last week, bitcoin rallied 17%, its second-best week of the year.
-
Bitcoin’s spot volume on Coinbase soared, nearing the March 2024 high.
-
Exchange balances for the largest cryptocurrency hit a year-to-date low, a sign of increased buying pressure, according to Glassnode data.
01:31
Bitcoin ETFs Are “Trojan Horse for Adoption”: Bernstein
01:22
Uptober Forming Amid Rising Stablecoin Liquidity and Bitcoin Transactions
01:01
Bitcoin Breaks $64K While Gold Soars
00:56
ETH/BTC Ratio Slid to Lowest Since April 2021
Donald Trump’s U.S. presidential election victory sparked a roaring few days for cryptocurrencies, with bitcoin (BTC) surging to a record and total cryptocurrency market cap eclipsing $2.7 trillion, a high for the year.
Bitcoin, at $1.16 trillion, is now the ninth-largest financial asset by market capitalization. The biggest cryptocurrency registered its second-best week of the year, rising 17%. That’s just shy of the 22% climb in the week ended March 3, according to Glassnode data.
Bitcoin : Weekly Price Performance (Glassnode)
To understand whether the bitcoin could theoretically climb higher or if this marks a local top, it’s essential to understand who is buying bitcoin and whether it’s a spot or leverage-driven rally.
Coinbase spot volume soars
First, let’s consider the spot cumulative volume delta (CVD), which Glassnode defines as “measuring the net difference between buying and selling trade volumes, specifically highlighting the difference in volume where the buyer or seller was the aggressor. It includes trades where USD or USD-related currencies serve as the quote currency, encompassing both fiat and stablecoins.”
Most of the spot CVD is coming from Coinbase, a crypto exchange widely used by U.S. investors and institutions, and coincides with a spike in the Coinbase Premium Index.
Zooming out over the past three years, it’s apparent that when Coinbase CVD spikes, it tends to be near local highs and lows. In March, one of the highest CVD levels occurred as bitcoin broke its then-record high above $73,000. There were also high levels near cycle lows around the Luna and FTX collapse in 2022, which shows smart money buying near the bottom and others buying near the top.
Basis trade or true bitcoin buying
There’s been much deliberation about whether inflows into U.S. listed spot exchange-traded funds (ETFs) are spot buying alone or if they’re part of a strategy known as the basis trade.
The basis trade is a technique for profiting from the discrepancy between spot and futures prices. It involves an investor holding a long position in an ETF while taking a short position in the Chicago Mercantile Exchange (CME) futures market, capturing the price spread.
At the start of the year,
