Bitcoin Hits $109,827 All-Time High Driven by Spot Market Demand

Bitcoin (BTC) recently reached a new all-time high of $109,827 on May 21, but the sustainability of this bullish momentum has been questioned by traders. While the $77 billion in Bitcoin futures open interest has played a role, a closer examination of the data suggests a more positive outlook for further price gains. The current 7% annualized Bitcoin futures premium is within the neutral range of 5% to 10%, indicating a relatively low level of leveraged bullish positions. This absence of excessive leverage reduces concerns about a rally driven primarily by derivatives.

In comparison, during the previous Bitcoin all-time high of $109,346 on January 20, the annualized futures premium reached 15%, showing a much higher level of leveraged bullish positions affecting the price. The current Bitcoin derivatives market appears healthier, suggesting strong demand in spot markets. During the January bull run, Bitcoin’s price on Coinbase traded at a premium compared to other exchanges, a phenomenon known as the Coinbase premium. This premium is not present now, indicating that buying pressure is more evenly spread out—a sign of a healthier market.

Excessive buying pressure on a single exchange can make it easier to trigger unsustainable price surges when liquidity is low. This data supports the idea that derivatives markets were not the main driver of the recent price increases. Moreover, the $1.37 billion in net inflows to spot Bitcoin exchange-traded funds (ETFs) in the United States between May 15 and May 20 further suggests that spot buyers, rather than derivatives traders, were the primary force behind the rally. Despite the lack of conviction in Bitcoin futures, several indicators point to further upside. Forced liquidations of bearish BTC futures positions were relatively low at $170 million between May 18 and May 21, cementing the idea of a spot-driven rally. In comparison, the rally to $104,000 on May 9 triggered $538 million in liquidations over three days.

On May 21, Bitcoin options markets showed a slight increase in demand for put (sell) options, but nothing unusual. For comparison, the put-to-call ratio at Deribit dropped to 0.4x during the previous bull run on January 20, reflecting lower confidence due to reduced volumes in call (buy) options. Bitcoin’s upward movement may have been limited by macroeconomic factors, especially as the tariff war continues. Still, the potential for the price to reach $110,000 and higher is partly based on the weak position of the US Federal Reserve. Injecting liquidity could ease recession concerns, but it also reduces the appeal of government bonds, which favors risk-on assets like Bitcoin.