While the victory for pro-crypto US presidential candidate Donald Trump has benefited Bitcoin (BTC), the top digital asset is expected to experience further gains from increasing volatility in the options market and expanding on-chain capital inflows.
Further Upside For Bitcoin On The Horizon?
GlassNode’s latest “Week On-Chain” report suggests BTC’s price will likely maintain its upward momentum, driven by two key factors.
The report highlights the rising volatility in the BTC options market and the expansion of on-chain capital inflows as primary drivers that could further propel the price of top digital assets.
According to the report, the total open interest across BTC options contracts has reached $25.2 billion. For comparison, open interest was only higher during March 2024 when BTC made its then-all-time high (ATH) of $73,737.
A high amount of open interest in BTC options could signal increased participation from both institutional and retail investors. Such heightened activity often amplifies existing price momentum, potentially pushing the underlying asset’s price even higher.
Additionally, options trade volume recently reached $2.9 billion, second only to the trading volume in March and during the yen-carry unwind on August 5.
Rising options trade volume typically signals greater institutional investment, often fueled by BTC reaching new ATHs.
The report adds that since September, net on-chain capital inflows into BTC have witnessed a substantial increase, showcasing a rising appetite among investors to allocate capital to the digital asset. It adds:
The Bitcoin Realized Cap has increased by 3.8% over the last 30 days, which is one of the higher inflow levels since January 2023. The Realized Cap is currently trading at an ATH value of $656B, supported by a net 30-day capital inflow of $2.5 billion.
For the uninitiated, a rise in realized cap indicates that more BTC is being held at higher prices. This often suggests that investors are long-term bullish on BTC, leading to reduced selling pressure and, subsequently, more room for higher prices.
Analysts Continue To Be Bullish On BTC
At the time of writing, BTC has a market cap of $1.49 trillion, and analysts remain optimistic about its potential for further expansion.
For instance, a recent report by digital assets custodian Copper.co noted that BTC’s bullish price momentum may extend into 2025, with projections of a $100,000 price by January 20.
Similarly, Ki Young Ju, CEO of on-chain and market data analytics firm CryptoQuant said yesterday that BTC may rise about 30% to 40% from its current market price, potentially sending the asset’s price to anywhere between $90,000 to $100,000.
However, amid this optimism, investors are advised to exercise caution to avoid potential losses due to Bitcoin’s volatile price movements.
Keeping an eye on data points such as open interest, and BTC exchange-traded funds (ETF) outflows could help traders mitigate risk. BTC is trading at $75,389 at press time, up 1.3% in the last 24 hours.
