Bitcoin has experienced a remarkable surge of over 40% in the past four weeks, leading to growing expectations that a major breakthrough is imminent. On Thursday, the cryptocurrency came close to reaching $38,000, marking its highest price point since May 2022. However, it is important to note that Bitcoin is still only halfway towards reclaiming its peak during the 2021 crypto frenzy, when it soared above $69,000.
Traders are now setting their sights on surpassing the $43,289 mark, as renowned trader Peter Brandt has charted out this price target if a flag or pennant pattern is validated for Bitcoin. Alongside the price surge, the demand for the Bitcoin network has also been on the rise. IntoTheBlock reports a 243% increase in Bitcoin fees week over week, with trading volumes reaching a six-month high.
Institutional and whale demand for Bitcoin has also witnessed a significant surge, with the volume of transactions exceeding $100,000 experiencing an 80% spike. Over the past week alone, a total of $230 million worth of Bitcoin was deposited into exchanges. The surge in funding rates, which are the fees that perpetual contract holders must pay when their prices deviate from spot prices, is another notable development.
Historically, high funding rates in either direction have indicated moments when the market becomes overextended, as was evident during the FTX crash in November last year. The fact that Bitcoin funding rates have reached yearly highs suggests that the market may be overly inclined to go long. However, it is important to exercise caution, as high funding rates have persisted for several weeks at various points in 2021 without resulting in an immediate crash.
While the current surge in Bitcoin’s price and demand is undoubtedly exciting for investors, it is crucial to approach the situation with a level-headed mindset. The cryptocurrency market is known for its volatility, and sudden price fluctuations can occur at any time. Therefore, it is advisable for investors to exercise caution and carefully monitor the market before making any significant decisions.
Note: This article was originally published on U.Today.