Market ‘Pricing In A Higher Fair Value’ For Bitcoin As Price Discovery Continues

Bitcoin (BTC) has performed remarkably over the past week, surging 30% since the November 5 US election. The flagship crypto surpassed its March all-time high (ATH), recording a new high nearly every day for the last seven days. Bitfinex analysts noted that the market remains “relatively stable” despite increased speculative activity.

Following Donald Trump’s victory last Tuesday, the crypto market has seen a massive rally, surging to a market capitalization of $3.05 trillion. Bitcoin has led the post-election bullish run with a 30% price increase, nearing the $90,000 mark earlier today.

According to Bitfinex Alpha report, the rally “highlights the positive reaction to the election outcome, with investors positioning themselves for potential economic stimulus and regulatory shifts.”

During the March highs, BTC’s realized profit volume reached its peak of $3.1 billion. Since then, realized profit volumes have gradually decreased, “reaching an equilibrium.”

As the report noted, there’s been a reset in supply and demand forces, which indicates, alongside the recent price surge, that “the market is now pricing in a higher ‘fair value’ for Bitcoin.” At the same time, the cryptocurrency continues its price discovery.

Moreover, profit-taking above $70,000 has been significantly smaller than the past instances when Bitcoin traded above this range, despite a structural increase in profit-taking.

Bitfinex analysts consider this to signal the “entry of a new wave of demand into the market,” backed up by Spot Bitcoin exchange-traded funds (ETFs) buying post-elections. Additionally, it suggests that fresh investor interest “could drive further upward momentum in the near term.”

The report highlighted record-breaking BTC ETFs’ inflows, around $2.28 billion in three days. This performance represented a significant increase from the pre-election de-risking, which saw the crypto-based investment products record their second-largest single-day outflows.

According to CoinShares data, Bitcoin ETFs closed the US election week with $1.8 billion in inflows and started this week with $1.1 billion in positive net flow. This performance displays a resurgence in demand for the flagship crypto as the market adjusts to BTC’s new price levels.

Bitfinex analysts explained that from March to August, there was significant supply and insufficient sustained buying pressure to absorb it. The recent demand surge suggests a notable shift as buying interest is “absorbing selling pressure at all-time highs and stabilizing market dynamics:

Now we appear to be entering into a new phase where the volume of profit-taking when BTC hits an all-time high is notably lower, given the amount of fresh demand entering the market post-election. This demand is helping to absorb the minor selling pressure still present, suggesting a healthier market environment and potential for further upward movement.

Meanwhile, Open Interest (OI) in Bitcoin futures and perpetual contracts reached ATH, hitting $45.43 billion. The report explains that this signals an increase in speculative activity but details that the market remains “relatively stable” since OI and BTC prices “are in equilibrium at elevated levels.”

Ultimately, Bitfinex anticipates some consolidation soon, with a potential pullback to $77,000. A correction toward this level would close BTC’s CME gap and strengthen Bitcoin’s position to climb even higher levels.

As of this writing, Bitcoin is trading at $86,225, a 5% increase in the daily timeframe.