Bitcoin (BTC) is compared to late 2020, but this rally actually has several big differences that make it “abnormal”.
According to Pete Humiston, manager of Kraken Intelligence Research, bitcoin is a different animal in the third quarter of 2021 than it was in the fourth quarter of 2020.
GBTC keeps its steep discount
Although Bitcoin rose from $ 29,000 to $ 48,000 in just one month, Bitcoin is still not experiencing a frenzy of interest and purchases.
Higher price levels have seen solid support, but there is little evidence of the type of demand that shaped earlier this year or late last year.
A typical example is the Grayscale Bitcoin Trust (GBTC), which continues to trade this week at a discount of around 13% to the spot price.
Although the price of Bitcoin has increased, GBTC demand has not increased entirely, and even the discounted rate is not treated as a bargain by many institutional investors.
At the bottom of BTC’s price decline, the GBTC premium was around -20%.
“Although GBTC is still trading at a large discount (-10%) from its 20% discount set in May,” noted Humiston.
“With demand really picking up again, which it doesn’t seem to be, we’ll likely see that discount dwindle as market participants take the opportunity to have a BTC exposure at a discount.”GBTC premium vs. BTC / USD chart. Source: Bybt
Financing rates lag behind the price trend
Two other factors that characterize the current Bitcoin market structure are low open interest on Bitcoin futures and lower than expected funding rates.
Related: BTC Sees $ 50,000 Breakout Despite Biggest “Greed” Since All Time Highs: 5 Things To Watch For Bitcoin This Week
Both contrast with the start of the 2020 bull run and go against the grain given the pace of price hikes over the past month.
Open Interest Chart for Bitcoin Futures. Source: Bybt
“In the time that $ BTC has moved from $ 30,000 to $ 48,000, open interest has fallen and Bitcoin is deceiving. The funding rate is still relatively low (albeit positive), ”added Humiston.
“Neither of them really followed BTC’s massive rally, which is surprising and not really normal.”
Nonetheless, funding rates are now more positive than ever since the price crash in May.
Chart of BTC funding rates. Source: Bybt
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