Institutional Weekly: Spot-Driven Bitcoin Rally Perceived as Sustainable

Presenting you with weekly insights into what the crypto community is buzzing about!

Bitcoin broke above $44K last week and then restreated to the level of $42k as the news pointed to the potential approval of a Bitcoin spot ETF in January. In the meantime, U.S. equities trimmed their gains as investors pulled capital from the Big 7 Tech stocks.

Weekly Macro Overview

The ADP® Employment Report surprised to the downside, with the addition of only 103,000 new payrolls. In addition, the pullback in hospitality firms drew attention as it was the first month of job cuts since February 2021. 

Token of the Week

Bitcoin was one of the leading performers among top-ranking tokens, with weekly gains of 14.8%, despite breaking above critical psychological resistance at $40K last week. This Bitcoin-led rally hasn’t seen a significant pullback since October, leaving the market wondering whether the bull market is here to stay.

Previously, we analyzed this time’s rally as institution-driven, with traditional crypto ETFs seeing tremendous capital inflows. We’ve seen more evidence to cement this hypothesis.

Glassnode’s chart (above) indicates the number of entities controlling addresses owning at least 1,000 BTC and Bitcoin's price since May 2022. The number of so-called whale entities has increased to 1,509, the highest since September 2022, supporting Bitcoin's bullish price action.

In addition, the derivative market suggests we’re witnessing a spot-driven rally. The implied volatility of Bitcoin ATM options since October has consistently been lower than in the 2020–2022 bull market.