On Monday, the price of bitcoin briefly topped $91,000 during Asian trading hours, reflecting ongoing market optimism around the world’s top digital asset amid shifting global political dynamics.
Last week, net inflows into U.S. spot bitcoin exchange-traded funds (ETFs), which have been trading since January, rose to $1.67 billion, according to SoSoValue . The rise indicated the sixth week in a row for positive net inflows, with cumulative investments jumping to $27.46 billion overall.
Similarly, ethereum ETFs, which have been trading since July, brought in a record-breaking $515.2 million last week. Overall, the new ETFs have accumulated total net inflows of $178.4 million .
While these trends signal growing investor interest in digital assets, market analysts are taking a more cautious outlook for the short-term. Specifically, they expect bitcoin options — contracts that let investors buy or sell bitcoin at a set price — to see limited price movement in the near future. The current implied volatility distribution — a metric used in the options market to estimate the expected future price fluctuations of an asset — for bitcoin options indicates a high likelihood of lower trading prices. This suggests that many traders anticipate that bitcoin is unlikely to experience a significant price increase in the near-term and may even decline.
Despite this cautious outlook, the price of bitcoin is currently trading near $90,000, after starting the year at a much lower value.
Moreover, this rise in bitcoin’s price often triggers a shift in investor behavior. As bitcoin gains momentum, traders tend to move funds from stablecoins into other cryptocurrencies, which can reduce the overall value of stablecoins and increase sell pressure on U.S. Treasuries. "As bitcoin price increases lead the market into gains across the board and a new bull market looks on the horizon, traders using stablecoins to store value will begin to take positions in other tokens, creating net outflows in stablecoin market caps," explained Kevin Lehtiniitty, CEO of stablecoin payments network Borderless.xyz, in an interview with TheStreet Crypto. "With the majority of stablecoin collateral invested in U.S. Treasuries, this will create sell pressure in those instruments at a time where the Fed has just lowered rates, compounding already weakening demand."
The upcoming Federal Reserve meeting in December is expected to slash interest rates by a quarter point. A decrease in interest rates typically leads to a weakening U.S. dollar and increased market liquidity, which encourages investors to pursue riskier assets like bitcoin. This, in turn, could further catalyze bitcoin’s price growth later this year.
