Institutions' Storm Buying, Absorbing 5x Mining Output, Will It Lead Bitcoin to Break $88,000?

▲ Bitcoin (BTC) Investment ©Dasol Go

Institutional investors' insatiable appetite is causing a severe supply shortage, gobbling up five times the daily mined volume, leading the leading cryptocurrency, Bitcoin (BTC), to surge past $81,000 in one go with a powerful rally that liquidated short sellers.

According to investment media FXStreet on May 5 (local time), the total market capitalization of virtual assets has reached $2.67 trillion, setting a new high since early February. However, instead of the entire market rising in unison, Toncoin (TON) led the surge with a 29% increase, Algorand (ALGO) rose 4.5%, and Basic Attention Token (BAT) gained 4%, while Dash (DASH) and Aptos (APT) fell by 5.5% and 2.1% respectively, clearly showing a differentiated market for individual assets.

Bitcoin rebounded sharply in just four hours, overcoming Monday's downward pressure, to reach the $81,000 mark, up 1.3% over the day. Experts analyzed that this rally was triggered by a typical short squeeze (buying pressure occurring to liquidate or cover short positions), based on the fact that this surge was concentrated just before the opening of the illiquid Asian market. Currently, a sixth bullish candle has appeared on the daily chart, forming a new ascending channel whose upper boundary touches the 200-day moving average.

The influx of massive capital, primarily into the spot market, strongly supports the price surge. According to Capriole Investments, institutional investors are scooping up more than 500% of the newly generated Bitcoin mining output each day. Historically, such extreme supply shortages have led to a price surge of approximately 24% over the following month. Michael van de Poppe, founder of MN Trading, also assessed that with Bitcoin breaking $80,000, the path for further short-term increases to $86,000-$88,000 has opened up.

The Bitcoin network and the macroeconomic regulatory environment are also sending positive signals. Recently, Bitcoin mining difficulty adjusted down by 2.3% to 132.47 T, and the 7-day moving average hash rate, according to Glassnode, is stably recording approximately 955 EH/s. Furthermore, the U.S. cryptocurrency market structure bill, the Clarity Act, for which Senators Thom Tillis and Angela Allsbrooks reached a unanimous agreement on stablecoin yield, is scheduled for deliberation by the Senate Banking Committee during the week of May 11, which is expected to significantly reduce market uncertainty.

Meanwhile, the virtual asset investment sentiment index reached its midpoint of 50 for the first time since January 17, marking a significant turning point. The media reported that, given the precedent that every short-term surge in the sentiment index since October last year provided favorable high-point selling opportunities for sellers, the market is now focused on whether this rally, fueled by a short squeeze (buying pressure occurring to liquidate or cover short positions) and spot accumulation, can settle into a true bull market.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*