Key Points
- Bitcoin (BTC) has made a moderate recovery over the past week, with its leverage ratio declining.
- Increased institutional demand and long-term accumulation are contributing to Bitcoin’s bullish momentum.
Bitcoin (BTC) has shown a modest recovery in the past week, increasing by 2.81%.
At the time of writing, Bitcoin was trading at $07.052, a 0.22% rise.
Bitcoin’s Gains and Factors Driving Them
BTC has shown significant gains on weekly and monthly charts, increasing by 2.81% and 2.89% respectively. The recent price rise brings into question the factors propelling it. According to Cryptoquant analyst Dan, BTC is witnessing an increase in institutional demand and long-term accumulation, as evidenced by a decreasing Leverage Ratio.
Bitcoin’s Leverage Ratio has been on a decline since November 21, according to CryptoQuant. A drop in the Leverage Ratio indicates a decrease in Open Interest (OI) relative to available BTC on centralized exchanges. This drop in Leverage Ratio reduces the risk of liquidation cascades, leading to more organic price action.
The Implications for Bitcoin
The surge in spot demand and active accumulation by institutions suggest a strong bullish sentiment in the markets. For instance, Bitcoin’s Coinbase premium index has remained positive throughout the past week, implying positive sentiment among U.S. investors and increased institutional demand.
Moreover, Bitcoin’s Fund Market Premium has turned positive, indicating bullish investors expecting prices to rise in the near term. The market participants are also accumulating more, with outflows outweighing inflows. This behavior suggests that BTC markets have cooled off, positioning the cryptocurrency for further gains.
If this sentiment persists, BTC could soon reclaim $98,127 and then attempt a breakout to $100k. A pullback here could see Bitcoin drop to $95,800. In simple terms, Bitcoin is seeing its bullish momentum strengthen as both retail and large holders continue to accumulate.