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Is Bitcoin’s supply squeeze signaling the start of a new rally?
Bitcoin’s recent surge in spot market demand has led to increased buying pressure and could potentially be the catalyst for a new rally.
Over the past month, Bitcoin (BTC) has experienced an unprecedented uptrend, reaching a new all-time high of $108,268. This upward momentum has left many wondering what factors are driving the king coin’s price action. According to CryptoQuant analysts, the primary cause behind this surge is growing spot market demand.
Spot Market Demand Drives BTC’s Uptrend
Avocado on-chain has posited that Bitcoin’s bull cycle is driven either by the Futures market or the spot market. It appears that the 2023 bull run was fueled by the Futures market followed by a spike in spot market activity, resulting in the surge in prices.
The data shows that both the spot and Futures markets experienced a prolonged decline from March to September. However, an increase in trading volumes for both markets has been observed since October 2024. This rise in spot market demand suggests that speculative excess in the Futures market is cooling down, while buying pressure in the spot market continues to gain momentum.
As such, it can be inferred that Futures markets will continue to experience a cycle of liquidations and overheating, which will ultimately lead to a further increase in BTC’s price. This trend will likely encourage more capital inflows into the spot market.
Typically, an uptick in buying pressure leads to higher prices. However, Bitcoin has experienced a recent correction, with its price dropping by 2.46% over the past day and currently trading at $103,825. Despite this dip, the data continues to show increased demand, particularly in the spot market.
The surge in spot market demand is evident through a decline in fund flow ratio. Furthermore, it can be seen that users are withdrawing funds from exchanges and holding them in private wallets. This signals reduced exchange activity and correlates with long-term market confidence.
Source: ambcrypto.com
