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It has officially been a month that the price of Bitcoin last hit its all-time high of about $61,850. And today, BTC hit a new high at $63,200 on Coinbase. Ether also hit a new ATH at $2,222 on the exchange. For the last two weeks, Bitcoin has been making attempts at a breakout which intensified this week ahead of the Coinbase listing on Wednesday. In line with BTC’s gains, XRP, UNI, LTC, XLM, DOGE, LUNA, RUNE, and others are also rallying. [coin_stats_table symbol="XRP"][coin_stats_table symbol="LTC"][coin_stats_table symbol="XLM"][coin_stats_table symbol="DOGE"][coin_stats_table symbol="LUNA"][coin_stats_table symbol="RUNE"] While the BTC price prepares for a strong breakout to $70k, Kimchi premium has also returned with a vengeance.
Bitcoin Already Above $70k
After getting popular during the top of the 2017 bull market, this higher price of crypto assets on South Korean cryptocurrency exchanges made its reappearance at the beginning of this year. “In the last 2 weeks, the Kimchi premium returned with a vengeance reaching over 20%, the highest level we’ve seen since 2017-18. While restricted travel is a major contributing factor to the arb, one cannot ignore the buying frenzy in the Korean retail market, especially in Alts,” noted QCP Capital, Asia’s crypto traders. As of writing, the price of Bitcoin is $62,620 on Coinbase while trading at $72,245 on Upbit, $71,710 on Bithumb, and $71,704 on Coinone. The level of Korean crypto frenzy has risen so much that volume on crypto exchanges in the country at times surpasses that of equity exchanges. Also, people from all age groups have been consumed by this frenzy that “could possibly draw increased regulatory intervention.” However, currently, the Korean market only accounts for roughly 2% of global crypto trading volumes compared to 7-8% in 2018. According to QCP Capital,“such retail fever, in general, tends to put a damper on topside price breakouts for the largest market cap coins especially BTC.”During alt-season, this pattern is rather typical as small market cap tokens record massive gains.
Distracting Juicy Yield
Another evidence of outsized buying interest can be seen in the BTC futures curve, which has hit a fresh ATH on a 3month basis at well over 40% annualized.“This massive contango is the steepest of any financial asset class out there by far and has been attracting a lot of attention in the mainstream media with institutions especially keen to get in on the risk-free futures roll down yield. This has caused further divergence between CME and native derivative exchanges,” noted QCP Capital.As we reported, JPMorgan, in its latest weekly report on Bitcoin, pointed out these yields, significantly higher than any other currency. CME is actually trading at a 10% annualized contango now compared to 43% on Binance, presenting an incredible arbitrage opportunity. It is different from what we saw during 2020’s Sept. Dec. bull run when CME was consistently higher than other exchanges as institutional demand dominated flows. But now, leveraged buying on non-regulated exchanges is leading the market, which time and again results in liquidations pushing the prices down. Today, funding rates went berserk above 0.3% momentarily before normalizing with the Bitcoin funding rate currently of 0.1640% on Binance. According to QCP Capital, this divergence is partly caused by retail mania overshadowing the institutional side and because of institutional interest in the rolldown yield, aka cash & carry.
Key Catalyst For The Local Top?
While institutions deploy more to this trade on CME, retail is more inclined to lever up through perpetual swap futures and spot volumes on a decline; the $ 55k level is the next bull/bear line. Even more bearish for the QCP Capital is the miners’ unusual HODLing behavior, not selling since before the March dip. All of this has them selling out their long calls and covering BTC spot long by selling the June & Sep 68k strikes and on ETH, selling the Jun $2800 strike. [coin_stats_table symbol="ETH"] However, they are not bearish, just that current market dynamics do not favor a further exponential move like Q1. The upcoming Coinbase listing, according to them, is a “key” catalyst event for Bitcoin to cover up the lost ground this month, as it drastically underperformed the S&P 500 in the last month. But while some market participants say this is very bullish and “is going to blow people’s minds, Matt Hougan of Bitwise sees it forcing “traditional finance to wrestle with the phenomenal growth that is taking place in crypto” QCP Capital is “extremely wary.”“The IPO on Wednesday could ultimately reveal too much short-term froth in the system and begin the seasonal mid-month decline. This seasonal intra-month pattern we highlighted previously has been performing like clockwork this year.”[deco-beg-single-coin-widget coin="BTC"]