It was off to new heights as bitcoin broke above the critical $53,000 pivot point traders were eyeing the prior week. Price began to appreciate shortly after the US equity market opened on Monday, with bitcoin taking out the $53,000 resistance level swiftly and closing the day at ~$54,500. The rally escalated into the middle of the week, with bitcoin ripping through the $50,000s, wiping out hundreds of millions of dollars in leveraged short positions in the process.

Volume and price climax occurred Wednesday, with bitcoin appreciating nearly 12% to an intraday high of $64,000. With only $5,000 or 7.8% left to reach the previous all-time high at $69,000, a notable spike in sell volume came into the market, causing the price to decrease rapidly to an intraday low of $58,800.

During the move up, close to $200 million in short positions were liquidated, and around $100 million in long liquidations as sellers took over after the run-up to $64,000.

Fortunately for bitcoin bulls, the price recovered back above $60,000 after the brief period of seller momentum, to close the monthly candle at $62,425.

This marks an important milestone for bitcoin as it is actually the highest monthly close on record!

The previous highest monthly candle was back in October 2021, where bitcoin closed the month at $61,359. There are still significant milestones to achieve before new all-time highs are in sight. Firstly, bitcoin needs to take out the weekly high at $65,510 achieved in early November 2021, followed by the highest daily close of $67,559 which occurred on November 8, 2021.

Futures Exchanges Open Interest Data

Bitcoin open interest aggregated across all major futures exchanges now stands at a jaw-dropping $25.61 billion: a new record. This is a $3.6 billion or 16% increase from last week’s reading, indicating that the capital at risk involved in the bitcoin derivatives market is at the highest it’s ever been.

Futures Funding Rates

Another key exchange metric to pay attention to is funding rates.

On bitcoin futures exchanges, funding rates are periodic payments exchanged in perpetual futures contracts to ensure that the contract price remains close to the spot price.

In this case, the funding rate hit a high of 0.1238% on Bitmex this past Wednesday: the 2nd highest reading in over 2 years.

Rates are measured per an 8-hour period, so this means leveraged long positions have to pay a 0.3714% rate per day on their positions. To put this in perspective, a $100,000 long-positioned trader has to pay $371.4 in fees to maintain their position per day. If funding fees remain elevated while the price is stagnant, this would likely incentivize traders to close their long positions.

This rate doesn’t go to the exchanges, however. It actually goes to traders operating short positions. Therefore, in theory, a high funding rate incentivizes traders to open short positions, effectively bringing balance to the Bitcoin leveraged futures markets.

Bitcoin Spot ETF Inflows & Volume

ETF inflows continued their upward trajectory this week, closing the trading week at over $7.5 billion in net inflows aggregated across the major ETF issuers. Blackrock’s $IBIT ETF is the first to reach the $10 billion club, a feat only 152 other equity ETFs have achieved (out of 3,400 total). In terms of volume, the ETFs had over $22 billion in trading volume, an impressive figure considering that is about the average they displayed over the course of January.

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