Bitcoin Surges 100% to $100,000 on Margin Trading

Bitcoin's recent surge, which briefly propelled the cryptocurrency above $100,000, has been largely attributed to speculative trading rather than robust on-chain activity. On-chain data reveals that the price increase was primarily driven by traders using borrowed funds, as evidenced by the high volume of Bitcoin futures in late June. Traders were placing bets on short-term gains, but the funding rates and the three-month futures basis both declined, signaling a waning bullish sentiment among traders.

The spot market did not experience a corresponding surge in activity. At its peak in May, the daily spot volume was around $7.65 billion, which is notably lower than the previous cycle highs that exceeded $20 billion on some days. This indicates that new cash from retail investors or long-term holders did not enter the market, suggesting they remained on the sidelines.

Despite the lack of retail interest, institutional buyers continued to accumulate Bitcoin. This week, firms such as Michael Saylor’s Strategy, Metaplanet, and ProCap BTC collectively purchased about $1 billion worth of Bitcoin. Additionally, US-listed Bitcoin ETFs bought over $1.5 billion in fresh supply. These consistent purchases demonstrate a genuine interest from institutional investors, even if short-term traders are setting the pace.

The supply of Bitcoin available on exchanges is another crucial factor. Currently, only 7 million BTC are freely available on exchanges, while approximately 14 million BTC are held by individuals who have not moved their coins in a long time. This supply squeeze could support prices if demand remains strong. However, it also means that any sudden sell-off could have a significant impact when exchange wallets run low.

The recent jump above $100,000 appears more like a sprint by margin players than a marathon fueled by new believers. Corrections often follow rallies driven by heavy margin activity. Yet, the ongoing buying by big companies and ETFs offers a buffer. If they continue to accumulate, Bitcoin may need a breather now but could rally again later. As of June 28, Bitcoin traded at $106,500, down 0.85% on the day. Market watchers will be looking for a return of fresh spot demand or a stabilizing of futures bets before declaring the uptrend back on solid ground.