Institutional investment drives cryptocurrency surge despite profit-taking patterns, according to Bitfinex.

The cryptocurrency market has achieved a new all-time high of nearly $3.5 trillion, with Bitcoin (BTC) at the forefront, propelled by a swift influx of institutional investment.

Moreover, the market share of altcoins, excluding Ethereum (ETH), referred to as Total 3, has reached its highest point in over three years.

A recent report from Bitfinex indicates that capital inflows since the pre-election low of $66,880 just 20 days ago are unprecedented, pushing Bitcoin to consistent all-time highs. BTC reached a peak of $99,334 before a minor correction brought it down to $95,611 over the weekend.

Despite some profit-taking by long-term holders, Bitcoin’s capacity to sustain its upward trend is bolstered by demand from new investors, primarily through exchange-traded funds (ETFs).

In the past week alone, net inflows into US spot Bitcoin ETFs have surpassed $3.35 billion.

However, as institutional trading generally slows over the weekend, the market experienced a price decline due to an imbalance between supply and demand. As Bitcoin nears the critical $100,000 threshold, it is vital to observe daily ETF inflows, as any decrease could suggest diminishing interest at these elevated price points and potentially indicate a larger correction.

Furthermore, the wider altcoin market, as represented by the Total3 Index (excluding Bitcoin and Ethereum), also reached new cycle highs, rising by 23.2% — the most significant increase since April 2021.

This increase reflects a growing interest from investors in altcoins, possibly influenced by market sentiment and changing regulatory landscapes.

Large-cap altcoins such as Solana (SOL) have reached new all-time highs, outperforming Bitcoin over significant timeframes and signaling the beginning of what is often termed “alt season,” a phase characterized by substantial upward movements in altcoins.

Countering sell pressure

This new institutional demand has been essential in mitigating selling pressure.

Historically, when Bitcoin achieves new all-time highs in a halving year, long-term holder (LTH) wallets — which typically accumulate during bear markets — become more active.

The average acquisition price for these holders currently stands at $24,912, yielding considerable unrealized profits at present price levels. As Bitcoin rises, LTHs have been liquidating their holdings, with over 461,000 BTC spent since the price surpassed the previous all-time high of $73,666 last month.

The Long-Term Holder Spending Binary Indicator, which monitors the percentage of days where LTH spending exceeds buying, indicates heightened selling pressure.

Nonetheless, the current distribution level is less severe than during previous peaks in March 2021 and March 2024, implying that the sell-off remains relatively controlled. Typically, when this indicator reaches such levels, it predicts a potential price peak within three to four months if maintained.

Surpassing traditional assets

This recent increase marks Bitcoin’s third-largest trough-to-peak movement since February 2020. With Bitcoin’s expanded market capitalization, the capital needed to achieve similar percentage increases has significantly risen.

Consequently, if Bitcoin sustains its current momentum, it could represent the most considerable deviation from the median monthly performance for the entire year.

The report noted that BTC’s recent rise has established it as the seventh-largest tradeable asset by market capitalization, surpassing major entities such as Saudi Aramco. Additionally, Bitcoin’s 56.9% gains quarter-to-date have outperformed traditional safe-haven assets, including gold and silver, which yielded returns of 5.3% and 8.1% during the same timeframe, respectively.

Potential for corrections

While the market remains optimistic, a minor correction or period of consolidation is anticipated, especially in light of forthcoming macroeconomic events such as the release of the US Consumer Price Index and the Federal Open Market Committee minutes.

Moreover, with volatility and liquidations rising—totaling over $500 million across all cryptocurrencies on several recent days—a balancing period appears likely.

The report also highlighted that funding rates for large-cap cryptocurrencies have been increasing, indicating the potential for heightened volatility and significant price fluctuations.

As Bitcoin’s rise continues, altcoins may experience amplified reactions to any BTC corrections, making it a crucial time for investors to closely monitor market dynamics.

The post Institutional capital fuels crypto rally amid profit-taking trends — Bitfinex appeared first on CryptoSlate.