Bitcoin experienced a strong rally last week, posting a 17% gain, its second-best week of the year. The spot volume on Coinbase, a popular US crypto exchange, also surged, reaching levels similar to those seen in March 2024. Additionally, exchange balances for Bitcoin hit a year-to-date low, signaling increased buying pressure. These factors, along with Donald Trump's US presidential election victory, contributed to a surge in cryptocurrency prices, with the total market cap surpassing $2.7 trillion. Bitcoin's market capitalization currently stands at $1.16 trillion, making it the ninth-largest financial asset. To determine if Bitcoin can continue to climb higher, it is important to consider who is buying Bitcoin and whether it is a spot or leverage-driven rally. The Coinbase spot volume and cumulative volume delta (CVD) show significant activity during local highs and lows, with Coinbase frequently accounting for most of the spot CVD. Additionally, there have been discussions about whether inflows into US-listed spot exchange-traded funds (ETFs) are primarily spot buying or part of the basis trade, a strategy that capitalizes on price discrepancies between spot and futures prices. While it was initially believed that ETF inflows were driving the market, Bitcoin has remained relatively stable, suggesting that ETFs have had a minimal impact on price. However, recent spot ETF inflows have outpaced the growth in open interest on the CME futures exchange, indicating increased spot buying. Lastly, data from Glassnode shows that Bitcoin balances on exchanges have reached a year-to-date low, indicating that users are withdrawing their Bitcoin from exchanges in favor of holding or buying more.



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