Bitcoin (BTC) Price Skyrockets to New Highs, But Brace for Volatility, Analysts Warn

Tensions over the U.S elections were quite high but Trump's win turned out to be a massive catalyst propelling BTC to new highs.

Bitcoin price has surged to new highs following the U.S elections. However, a closer look at key on-chain metrics reveals a scenario that might lead to a strong pullback.

Bitcoin Surges To New Highs But…

Bitcoin price reacted positively to a Trump win in the U.S presidential elections as was widely anticipated by the crypto community. BTC price surged to new highs above $63,000.

Related Reading | Bitcoin Surges Past $63K, Pro Trump Narrative Plays Out

Many expected Bitcoin to rally following a favorable election outcome, and that scenario has already played out. Anticipation for more upside in the coming weeks or months is high, but that doesn’t necessarily mean that smooth sailing lies ahead.

Historically, every time Bitcoin price has broken out into new territory, it has also been met with a high degree of volatility. This is because breakouts are usually driven by bullish hype and expectations tend to be set high. The above description fits the current situation.

Bitcoin Open Interest Soars To New Highs, But..

While new highs tend to factor in periods of high excitement, price action also tends to be highly volatile. This is largely due to overleveraged trades being liquidated, and this may already be kicking in.

Bitcoin open interest also surged to new highs. A surge in open interest usually goes hand-in-hand with leverage, and in BTC’s case, it is likely leverage to the upside. An expected wave of sell pressure sweeps through this liquidity, leaving a trail of massive losses.

The liquidations fuel the massive pullbacks that have historically been observed in volatile conditions. Bitcoin’s latest situation fits the characteristics that lead to these types of volatile price swings that wipe out overleveraged positions.

Latest large holder flows may already be hinting at such an outcome.

Large Holder Flows May Be Signaling A Pullback

Large holder inflows added to the bullish momentum, surging from 208 BTC on 3 November to 43,870 BTC by 4 November. This represents over $3 billion worth pf Bitcoin flowing into large addresses.

However, large holder inflows then dropped to 11,460 BTC by 5 November, which indicates a significant slowdown. Meanwhile, large holder outflows also surged, which means that a significant number of whales have been taking profits.

Bitcoin registered zero outflows on 2 November, but that figure surged to 10,290 BTC by 5 November.

It’s worth noting that this data may be subject to change, especially since it was taken before the election results. This meant that the market may have shifted sentiment in favor of more demand from whales.

Volatility May Hit Hard

One relative measure of demand in the market for BTC is Bitcoin ETFs. According to Looksonchain data on 6 November, Bitcoin had a net outflow of -3,755 BTC, which was equivalent to $279.97 million in outflows at the time.

On the bright side, the Bitcoin marketcap crossed $1.5 trillion at the last check, which put it ahead of Meta, which had a marketcap of $1.44 trillion, and secured the 9th spot on the top 10 largest assets by market cap.