Last week saw Bitcoin rise again to surpass the $93,000 mark. This was primarily due to an influx of institutional participation and an upswing triggered by squeezed shorts, strengthening sentiment ahead of a crucial Federal Reserve meeting. Nevertheless, market analysts and trade pundits caution, we are yet to see if this is a signal of a fresh upward trajectory or merely a pause.
As per industry tracker The Block’s price analytics, Bitcoin has seen a significant increase of approximately 8% since the lows of Monday, reaching a two-week high. Concurrently, Ether regained its stride over the $3,000 mark, buoyed by positive sentiment surrounding the imminent Fusaka upgrade. This surge also propelled the total crypto market capitalization to nearly $3.2 trillion — a culmination of comprehensive uptrends in major altcoins, such as SOL and BNB.
In his analysis, Timothy Misir, BRN Head of Research, attributed this upswing in part to forced buying as short bets encountered a squeeze at prices beyond $93,000. Glancing at exchange order books, Misir noted dense bundles of liquidation thresholds around that price point. He further highlighted that active short-liquidation bundles were forcing covering, amplifying the shift and increasing short-term volatility. Misir indicated that Bitcoin has attracted roughly $732 billion in novel capital during this cycle – an increase more than double than that of previous ones.
Flow of ETFs Provides Additional Momentum
Moreover, the flow of spot ETFs has further augmented this shift. On December 2nd, U.S. Bitcoin spot ETFs recorded net inflows amounting to roughly $58.5 million, marking an unbroken five-day wave of positive flows. Concurrently, Solana investment tools fetched around $45.8 million over the same duration, while Ethereum ETFs showed a moderate outflow of $9.9 million.
Traditional Big Firms Extend Crypto Access
This flow coincides with traditional corporate bigwigs lowering the structural barriers around virtual assets. A prime example is Vanguard, which has made provisions for clients to trade funds containing crypto assets such as Bitcoin, XRP, and Solana on its platform — a significant turnaround given its previous disinclination toward the sector.
Bank of America is another addition to the list of crypto-favoring institutions, which now reportedly seeks to allocate 1% to 4% of its crypto assets for Merrill and Private Bank clients. Early next year, the second-largest bank in the U.S. by total assets plans to start CIO coverage on four spot bitcoin ETFs, including BlackRock’s IBIT.
Framing these moves, Misir commented that they ease structural capital frictions and facilitate large cash reserves for maintaining or boosting exposure to Bitcoin.
Despite Improved Onchain View, Structural Risks Persist
While on-chain signs reflect this bifurcated tone, Misir pointed out a freshly minted $1 billion Tether on Tron as an indication of improving stablecoin liquidity. This moves along with large strategic acquisitions, such as BitMine’s Tom Lee adding close to 97,000 Ether ahead of the Fusaka upgrade.
However, it’s not all positive. Miner margins continue to feel the squeeze amidst profitability challenges, leaving supply-side at risk if prices were to stumble. Furthermore, large holder or ‘whale’ accumulation has stagnated.
A Confidence Builder Rather Than A Structural Paradigm Shift
Current market analysis indicates that the fresh moves amount to a confidence booster, as opposed to a fundamental shift.
“Today’s movement matters because it restores confidence and illustrates how quickly forced liquidations can fuel momentum,” explained Misir. Nevertheless, he conceded that this has not remedied the structural issues: miner profitability is under strain, large-holder behavior is fluctuating, and macro uncertainty continues.
Both Misir and QCP are of the opinion that rallies, for now, should be treated as tactical chances, while market watchers should keep a keen eye on ETF flows, onchain supply movements, and the Fed’s upcoming moves for indications of a more sustained trend taking shape.
