Bitcoin priced in RMB approaches historical highs, igniting bullish sentiment in the crypto market
In the past 12 hours, it has risen by over 10%, just a stone's throw away from the previous high in RMB terms, while also trending on Weibo.Author: Frank, Foresight News
Since 22:00 Beijing time last night, Bitcoin has gradually strengthened, breaking through the integer levels of 52000 USDT, 53000 USDT, and 54000 USDT, stepping out of the fluctuation range of nearly half a month.
This morning, it experienced another explosive surge, jumping 3000 USDT in just half an hour, reaching a high of 57500 USDT (OKX spot market, same below), with an increase of over 10% within 12 hours, setting a new high since December 3, 2021. In RMB terms, it has also surpassed 400,000 CNY, just a stone's throw away from the historical high (410,000 CNY), and has climbed to the 22nd position on Weibo's trending list (as of the time of publication).
Meanwhile, Coinglass data shows that nearly 300 million USD was liquidated across the network in the past 12 hours, with Bitcoin liquidations amounting to about 172 million USD and Ethereum liquidations around 53.58 million USD, almost a massacre targeting Bitcoin shorts.
Bitcoin "new high" imminent, altcoins blooming in multiple areas
In USD terms, if we take 47500 USDT as a benchmark, Bitcoin is only about 20% away from the historical high of 69040.1 USDT set on November 10, 2021.
In RMB terms (Google Finance data), if we take 405343 CNY as a benchmark, Bitcoin is almost within reach of the historical high of 410846.24 CNY set on November 10, 2021.
Additionally, Ethereum has also been gradually strengthening. Since last October, ETH has been continuously declining compared to BTC, with the ETH/BTC exchange rate dropping from above 0.064 to around 0.05, fluctuating widely around 0.05-0.055.
Since mid-February, the ETH/BTC exchange rate has begun to break out of the fluctuation range, successively breaking through 0.055 and 0.06 in the past week, reaching a recent high of 0.06055. Although it has slightly retreated due to Bitcoin's surge last night and this morning, it remains relatively strong overall.
At the same time, aside from Bitcoin holders who are profiting and the gradually strengthening Ethereum, the entire altcoin market is also showing a blooming trend.
Bitcoin ecosystem thriving
Since the beginning of this year, the market has further focused on the Bitcoin scaling track, and discussions around Bitcoin's technical aspects have begun to increase again. Especially in the current context of building a prosperous DeFi application layer on the Bitcoin ecosystem, it has become a new mainstream narrative.
As the current leader of the Bitcoin ecosystem, Stacks (STK) has been a major target for speculation over the past six months, rising from 1.5 USDT to 3.1 USDT since February, an increase of over 100%.
At the same time, RIF has also accumulated an increase of over 80% from around 0.13 USDT in early February to 0.23 USDT, while others like BADGER have also seen significant increases of over 60% this month.
AI stands out
Tokens related to the AI sector have also recently experienced explosive growth, with WLD, which has intricate ties to OpenAI founder Sam Altman, climbing from around 3 USD to a peak of over 9 USD after the news broke, with an increase of over 300% in less than half a month.
Additionally, ARKM has risen from 0.6 USDT in mid-February to a peak of 1.8 USDT, also achieving a 300% increase; AGIX and FET have also seen increases of over 200%.
Other hotspots blooming
In addition, in the meme sector, PEPE has seen a daily increase of over 50% for two consecutive days, reaching a historical high since May 8, 2023; in the GameFi sector, the leading GALA has accumulated an increase of over 70% since the beginning of the month, and APE has also risen nearly 50%, breaking out of the bottom range.
In the sports sector, CHZ has broken through the upper edge of the fluctuation range at 0.115 USDT, reaching 0.14 USDT, a new high since April 2023. According to historical patterns, with the upcoming global sports event cycle starting in June 2024, this is precisely the starting point for the sports sector's "seeking the sword in the boat," and a new market trend may emerge.
Future market: new high or peak formation?
The historical high is not only a resistance point in terms of price but also an important psychological threshold for market sentiment.
Therefore, whether Bitcoin can continue to rise to 60,000 USDT or even break through the previous high of 69,000 USDT will directly determine the overall trend of the market.
Let’s take a comprehensive look at the current news and capital factors, which may help us gain a more objective judgment on the future market.
Continuous capital inflow from ETFs and MicroStrategy
For Bitcoin, the largest incremental capital inflow currently is undoubtedly from spot ETFs.
As of February 25, the total net asset value of Bitcoin spot ETFs is 37.67 billion USD, with an ETF net asset ratio (market value compared to Bitcoin's total market value) reaching 3.76%, and the historical cumulative net inflow has reached 5.63 billion USD.
Yesterday, the total trading volume of 9 Bitcoin spot ETFs reached 2.4 billion USD, about twice the recent daily average trading volume, setting a new historical high.
Additionally, as a long-term holder of Bitcoin, MicroStrategy announced last night that it purchased approximately 3000 Bitcoins for about 155.4 million USD, with an average price of about 51813 USD per Bitcoin.
As of now, MicroStrategy has purchased 193,000 Bitcoins for about 6.09 billion USD, with an average price of 31544 USD per Bitcoin, and the total value has now exceeded 10 billion USD.
It is worth noting that MicroStrategy's total market value is 13.5 billion USD, and the fair value of the BTC it holds accounts for 80% of its total market value, meaning that 4/5 of its net assets can be understood as the value of Bitcoin, which can almost be seen as a "quasi-Bitcoin ETF."
Interest rate cuts and balance sheet reduction nearing the end?
Although the CPI and PPI data for January in the U.S. exceeded expectations, and Federal Reserve officials have begun to "speak firmly," leading the market to continuously adjust interest rate cut expectations, at least for now, betting on interest rate cuts and balance sheet reductions in the second half of the year remains mainstream.
Currently, the Federal Reserve's observation tool shows that the market expects the first interest rate cut to occur in June, with a probability of 53.7%—at the same time, the possibility of a rate cut in March has dropped from around 55% a month ago to 10%, while the probability of maintaining the current rate in March is as high as 90%.
However, the macro-level risk of interest rate hikes has indeed increased. If the Federal Reserve raises rates again, the dollar index is expected to approach historical highs, which is also a hidden black swan event.
Potential concerns about U.S. stocks "topping out"
Now, Bitcoin, which is increasingly seen as a risk asset, is becoming more closely correlated with U.S. stocks.
On Monday night, the three major U.S. stock indices all fell, with the S&P closing down 0.38%, the Nasdaq down 0.13%, and the Dow down 0.16%. Among the "seven sisters" of tech stocks, five (Alphabet, Meta, Apple, Microsoft, Amazon) closed down, while only Nvidia and Tesla saw gains.
Discussions about tech stocks topping out are becoming more frequent, with the market largely relying on Nvidia and the AI narrative. If expectations for future interest rate cuts change, U.S. stocks may face a correction, which could impact the crypto market.
Funding rates returning to high levels
It is worth noting that the most direct risk signals in the crypto market are beginning to accumulate—BTC and ETH perpetual contract funding rates have surged to about 80% since 8:00 this morning—long positions are continuously paying a massive funding fee equivalent to an annualized 80%.
This means that long positions are subsidizing shorts significantly every day, leading to continuous losses. As time goes on, if the upward momentum stalls, long positions may suffer excessive losses, and those long positions that are paying large funding fees and remain bullish may be forced to liquidate quickly under pressure.
Once some longs start to liquidate, it could trigger a domino effect, leading to a large-scale liquidation. This happened on December 9-10, 2023 (Saturday and Sunday)—longs endured losses of over 30% for several days, and when the price failed to break through over the weekend, a massive sell-off began early Monday morning.
