Bitcoin soars: Where are billions of dollars going?

Bitcoin's 27% rebound was not driven solely by leveraged trading

Bitcoin's recent strong 27% rebound was not driven solely by leveraged trading. According to data shared by Ali Charts, during the period of price increases, spot trading volume increased by 153%, while perpetual contract trading volume increased by only 109%. In addition, the decline in the number of open interest contracts denominated in bitcoin also suggests that new funds have dominated the rally.

It is worth noting that not all funds have flowed into exchange-traded funds (ETFs). During the same period, Binance's bitcoin balance increased by approximately $2.63 billion. This figure is very close to the total amount of US$3.05 billion entering the U.S. spot Bitcoin ETF during the same period. So, where did the funds poured into the market flow as Bitcoin rose?

Why did spot trading dominate the rebound?

The most eye-catching detail of the rally is that trading volume in the spot market is growing faster than in the derivatives market.

Data showed that spot trading volume surged 153%, while perpetual contract trading volume increased 109%. During this period, the ratio of spot trading to perpetual contract trading fell from 6.02 times to 4.97 times. This change suggests that the increase in prices is not simply due to increased positions in the futures market. More importantly, as the price of bitcoin rises, the number of open contracts denominated in bitcoin declines. This means that although the value of Bitcoin has increased, the market has not simultaneously increased the amount of leveraged funds of the same size.

Therefore, this data chart presents different characteristics from the traditional "leveraged rebound". When prices rise, the accelerated growth in spot market activity directly reveals the increased activity of Bitcoin trading. Progress on ETFs also supports this view: inflows to spot bitcoin ETFs turned positive before the price rise began.

New funds mainly flow to Binance

In this rebound, one of the most eye-catching capital flows is Binance. Data shows that Binance's bitcoin balance increased by approximately $2.63 billion. During the same period, total capital inflows from all U.S. spot Bitcoin ETFs were US$3.05 billion. In other words, the increase in the BTC balance on Binanping Platform alone is almost equivalent to most of the total capital entering the ETF market.

Binance's weight in the spot market is equally eye-catching. Throughout the rally, Binance was the only trading platform with an average daily spot trading volume of more than US$10 billion. The platform alone accounts for approximately 46% of the total spot trading volume of monitored platforms. Although OKX ranks second in the graph, trading volumes on other exchanges lag far behind Binance.

This concentration is one of the most powerful signals that returning capital is not evenly distributed in the market.

Why did leverage take a back seat when Bitcoin rose?

Under normal circumstances, sharp price increases are often accompanied by an expansion in the number of open contracts, as investors may drive the market by establishing new long positions and using leverage. However, during this rally, the number of open interest contracts denominated in bitcoin fell. This makes it difficult to explain price movements solely based on new positions in derivatives markets.

The 153% increase in spot trading volume, the positive inflow of ETF funds, and the decline in bitcoin-denominated open interest all point to the same conclusion: new funds have indeed entered the market. But this raises a new question: If new money flows back into Bitcoin, will it spread across the entire cryptocurrency market?

Data shows the opposite.

Funds returned to the market, but were not evenly distributed

Ali Charts 'analysis pointed out that in the final stage of the rebound, capital was not equally distributed in the market. As Bitcoin rose, trading volume in the spot market expanded significantly, and large exchanges led by Binance attracted more capital. In contrast, growth in derivatives trading has been more limited.

This difference is critical because it shows that Bitcoin's rise cannot be simply explained by "increased leverage." The structure of the rebound shows more obvious real spot demand. In particular, the proximity between the increase in Binance's bitcoin balance of US$2.63 billion and the total inflow of US$3.05 billion in the U.S. spot bitcoin ETF strongly proves the strong strength of New Capital in this rebound.

The key now is whether this capital will remain in the market after the rally ends. If spot trading volumes remain high and pressure on open interest denominated in bitcoin persists, the claim that this price move is caused solely by short-term increases in leverage will become even more difficult to hold true.

This content is based on general market data and does not constitute investment advice. Readers are advised to conduct independent research.