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min read ▪ by
As if nothing had happened, BTC has just resumed its bullish rally. After a worrying drop this winter, the king of cryptos is not only heading back towards its December 2024 record of $108,000, but easily surpasses it to reach a new ATH at $111,000. This record has created a buzz among traders who have opened a record number of positions.
In brief
- BTC reaches a new high of $111,000 after five weeks of increase, easily surpassing its previous December ATH.
- Trader enthusiasm pushes Open Interest to a record $80 billion, but long positions risk a sharp correction.
- Massive inflows into Bitcoin ETFs with $934 million in net inflows in one day, including $877 million just for BlackRock.
Review of BTC’s spring rebound
After reaching an ATH of $108,000 in December and approaching it again in January, BTC’s price saw a significant decline this winter. With a local bottom of Bitcoin at $76,000 in early April, the crypto market experienced difficult months, a striking contrast with the time when 10,000 BTC were enough to buy two pizzas.
Despite uncertainties in the global geopolitical situation and the consequences of the tariff war led by Donald Trump, BTC has resumed an upward trend for over a month. After five consecutive weeks of increase, December’s ATH was reached this week. But far from being a resistance to BTC’s rise, this peak was easily surpassed to reach $111,000 yesterday. Even though BTC experienced a slight correction, the record level of open interest observed in futures markets indicates that BTC probably hasn’t reached the definitive peak of this cycle.
The traders’ frenzy
The approach of this new high obviously awakened traders’ appetite after these months of gloom. Expecting the rise to continue, they massively opened long positions on Bitcoin while short sellers were gradually liquidated. Open Interest, which measures the total value of futures contract positions, also reached a record value of $80 billion according to CoinGlass. There has therefore been a 30% increase in Open Interest since the beginning of May, showing the traders’ enthusiasm.
This frenzy that has seized the market around Bitcoin can have consequences on its price. If a decline quickly liquidates longs, there is a risk of a vicious cycle that drives Bitcoin’s price down even further.
Indeed, contracts worth about $2.76 billion are set to expire on May 23, with a ratio of 1.2%, meaning there are more shorts than longs with a max pain at $103,000, which could be the stopping point for this spiral if Bitcoin continues its correction.
Demand supported by ETFs
Although the explosion of derivative contracts on Bitcoin weakens its price, demand for ETFs has the opposite effect and could stabilize BTC’s price. Indeed, Thursday, May 22, was a record day for ETFs with $934 million in net inflows.
BlackRock continues to dominate this market since its fund IBIT (iShares Bitcoin Trust ETF) accounts for most of these inflows with $877 million and a total of $47.55 billion since its listing in January 2024.
While still much smaller than BTC’s market, the Ethereum ETF market also had a very good day yesterday with $110 million in net inflows.
After a new record yesterday, BTC saw a slight correction down to $108,000, liquidating more than $300 million in long positions this morning. For now, the old ATH seems to withstand the pressure from short sellers, which could make it a new support level to resume the bullish trend next week.
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DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
