Bitcoin trading volume is approaching its peak, will the price increase trend stop?

Bitcoin’s growth this season has been driven by the low supply of Bitcoin traded and its highly stable money supply, both of which have historically been a recipe for price gains. The Altcoin boom is coming as Bitcoin’s exchange volume rises and its dominance gradually returns to its former highs .

At the time of writing this report, Bitcoin’s market dominance has risen from 60% to 61.4%.

As for other cryptocurrencies on the market, double-digit growth for Polkadot, Cardano, XRP, BNB, LTC, and BCH has become the norm recently, and almost all important indicators point to Bitcoin's rise.

In addition to important indicators supporting the bullish view of Bitcoin, behind the spot and derivatives, institutions and crypto trusts are locking up large amounts of Bitcoin and Ethereum.

As of February 16, 2021, the Grayscale Bitcoin Trust Fund has increased its holdings by 650,000 bitcoins, reducing the supply of bitcoins in circulation to 14 million .

According to data from CoinMetrics, there are slightly more than 14 million bitcoins in circulation, out of a total supply of 18.6 million. This free-floating supply can be traded by exchanges and institutions.

Among the top institutions with Bitcoin trust funds, GrayScale owns more than $31 billion worth of Bitcoin. In addition, a large portion of Bitcoin's supply does not enter circulation.

Less than 45% of all Bitcoin has been circulating on the network since 2020. Even as prices hit new highs of $50,000 on top exchanges, more than 55% of all Bitcoin remains dormant .

Although the percentage of active supply in 5Y-7Y has increased significantly in the past few weeks, it is still low at 45%.

We should also note that according to data from Glassnode Alerts, 1Y-2Y supply has declined over the past three weeks, fueling the bullish narrative of higher prices .

In addition to the trust's activities and the low circulation of active Bitcoin, CME Futures provides institutional investors with exposure to Bitcoin derivatives, which opens up new investment channels for institutional clients. Institutional clients can choose to deposit Bitcoin in the Grayscale Bitcoin Trust and short Bitcoin on the CME.

Based on the premium from Grayscale, customers will receive additional Bitcoins. As long as the premium remains relatively high, it will be one of the main reasons why Grayscale continues to attract institutional clients.

With volumes climbing on both spot exchanges and the CME, prices are likely to continue to rise in the current market cycle .

The original text comes from ambcrypto, with some deletions, and translated by Blockchain Knight. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.