Bitcoin rally hinges on spot market activity as derivatives slow down
Author: Content Editor
Bitcoin's latest rally is being driven by spot trading rather than derivative trading, with market sentiment shifting to increased spot demand. The BTC Fund Flow Ratio has increased, indicating a higher inflow of funds to and from exchanges and a focus on spot trading. Both derivatives and spot trading have accelerated in the past quarter, but spot activity is becoming more dominant as the year comes to a close. The behavior of short-term trader whales is contradicting retail sentiment, with overall trading behavior causing the Bitcoin fear and greed index to reach 'extreme greed' levels. There is rising demand for long-term reserves of BTC, and the Coinbase premium index shows increased demand for spot BTC buying on the US dollar market. Spot trading has also increased the share of US dollar trading for BTC. Miners, ETFs, and corporate buyers are the major sources of BTC demand, leading to a supply crunch. BTC is currently in the accumulation zone and has potential levels to test $110,000 and peak above $125,000. However, there is a possibility of short-term drawdown due to liquidation attacks.