Has Bitcoin Topped at a New Record High?

Bitcoin has reached new record price highs. But has the cryptocoin topped, or is the best yet to come?

The past two years have been some of cryptocurrency's most energetic and volatile. Yet this week, they culminated in a record high for bitcoin, with many altcoins following suit and making huge gains. The memecoin market is buoyant, and institutional adoption continues. The big question is whether Bitcoin will continue its price rise or if the peak has already been reached.

Bitcoin Reaches New Heights

In April, the Bitcoin price dropped as low as $74,000. Yet in just five months, it has rocketed to a fresh high. The BTC price currently stands at $120,947, after a pullback from a $124,128 record high. While momentum has dropped somewhat, there are still many predicting $130,000 before the end of the year and even further to a possible $150,000.

This was the culmination of a week-long rally that lifted the cryptocurrency market as a whole. It placed bitcoin up 6% over the period of 7 days, surging it past previous records of just over $122,000. Bitcoin's market capitalisation went past $2.46 trillion.

Indicators on metrics suggest that it may not yet have peaked. There are low levels of short-term capital inflow, which have been apparent when other peaks were broken. Profit-taking was also extremely low. One key factor was the bitcoin funding rate. It is used to gauge overheated markets, and an increase in long bets has been much less than in previous peaks. When this goes up, it can suggest that liquidations have begun along with an increase in volatility. If the $120,000 level can hold as support, then this could continue.

Why Has Crypto Made Such Gains?

At the heart of this has been the speedy nature of institutional adoption. Inflows have continued to be strong in cryptocurrency-based ETF products. Added to this has been the demand from the corporate sector for Bitcoin, with many companies building their own reserves. In the week before, Metaplanet, Strategy, Smarter Web Company, and Capital B were just some of the companies that added more bitcoin to their holdings.

Changes have also been made regarding US regulations for cryptocurrencies. This month, an executive order was signed that helped lower the risk level of crypto assets. Federal banking regulators had to get rid of reputational risk, which had often led mainstream banks to avoid dealings with cryptocurrency organisations.

A favourable view on the consumer price index also edged it up toward the middle of the month. This measures the increase in goods and services over time and is often used to gauge inflation. Last week's index was not as harsh as expected, with many seeing it as an increased likelihood of rate cuts. This saw a pivot to riskier assets, of which crypto is one.

What Altcoins Performed Well?

It has not just been Bitcoin that has seen huge gains. Ethereum also moved up by 28% over the past seven days, outpacing even bitcoin. This saw it trading at just over $4742 and placed it tantalisingly close to its all-time high of $4865. Primarily, this has been pushed by strong inflows into ETH ETF products, which initially had a tepid reception from investors.

XRP also saw a huge weekly gain of 8%. This has pushed it 17% from its monthly lows. Even profit-taking by whales who offloaded 900m tokens has not made it falter, with some predicting a bear run imminent due to the cleaning up of legal problems with the SEC.

An increase in altcoins overall also helped to push the entire crypto market to a new high of $4.23 trillion. This was an increase of 1.9%.

Has Bitcoin Topped?

Other predictions are that Bitcoin may have finally topped. This would put it currently at just over $124,000. The reasons for this were liquidity in the run-up to its high, also triggering a sell candle on the daily metrics. This was coupled with slowing momentum, visible on the relative strength index.

Diminishing buying pressure is also abundant, which usually comes before price declines. These may form in a short-term pullback, which we could be experiencing now. However, RSI does not always correlate with a trend reversal, so this is one for traders to keep an eye on.

Market capitalisation is also double the realised capitalisation. The latter values each unit of an asset based on its last transaction price on the chain. Most coins that have been moved are now in profit, which can create selling pressure, causing a dip in value. This could be exacerbated should whales begin to move large amounts.

The next few weeks will be crucial. This price high could stir momentum, and with corporate interest still high, it seems unlikely any drops would be huge. Most changes will pivot on macroeconomic conditions and changes in global politics, as investors move from risky to traditionally safer assets. 

(Disclaimer: Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)