Analysis: Institutions are accelerating their accumulation of BTC, with daily purchase volume reaching 6 times the mining output, targeting a price of $96,000.

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Author: Charles Edwards

Translation: Deep Tide TechFlow

Deep Tide Guide: Institutional demand for Bitcoin has reached unprecedented levels, with purchase volume at 577% of daily mining output. Historically, whenever this occurs, Bitcoin’s price has experienced double-digit gains in the following weeks. Meanwhile, on-chain data, technical indicators, and derivatives markets all show strong bullish signals, suggesting this may not be just local enthusiasm but the beginning of a larger upward trend.

Reasons to be Bullish on Bitcoin and Stocks

Since the last issue, institutions have been aggressively buying, now at a rate of 577% of daily mining output. This number is huge. Bitcoin has risen 12%.

Have we reached a local speculative peak? Or is this just the start of a bigger rally?

In this issue, we analyze Bitcoin and the stock market in depth.

Bitcoin looks bullish on both on-chain and technical data. We reaffirm what we wrote last time: “With this series of data points, it’s hard not to be bullish.”

Institutions are buying at over 600% of daily mining output

Capriole’s longest-running on-chain and technical models are long at $71,000

Derivatives market in March/April shows complete capitulation

SOPR shows capitulation and bullish breakout

Institutional demand for Bitcoin

Institutions are buying Bitcoin at over 600% of daily mining output. Historically, whenever this level is reached, prices surge within the next week. As shown in the chart, in all previous cases, we typically see double-digit returns within a few weeks. This could push the price to about $96,000.

Trend King leverages long Bitcoin

Trend King is our longest-running live trading strategy, publicly launched in 2019 and managing funds continuously since then. It was rated the top Bitcoin strategy globally in 2019, 2020, and 2021. This is its first public release since 2021. Trend King mainly uses technical strategies but also considers selected on-chain factors. Currently, Trend King is leveraged long Bitcoin.

Bitcoin Perps Heat tracks the second-largest Bitcoin derivatives market—perpetual contracts—measuring the long-term relative extremity. By observing funding rates and open interest, standardized over four years. When relatively high, many are long Bitcoin; when low, many are short. The key is to look for extended periods in high/low zones. We just obtained an extremely bullish long-term signal from an overshort condition.

Last time, we discussed the Spent Output Profit Ratio (SOPR) being below 1 as a “great Bitcoin opportunity in the past.” This time, we have a bullish confirmation, returning above 1. This is a good sign that price and on-chain momentum are returning to positive territory.

The Macro Index, our Bitcoin model based solely on fundamentals, tracks over 200 on-chain and macro market data points, providing our preferred aggregated view of Bitcoin fundamentals. The Macro Index also turned bullish around $71,000 a few weeks ago. It is now in a “recovery” mode, with trends often exhibiting stickiness.

A classic, quite strong market strategy is risk appetite and going long

The advance-decline line shows weakness at highs

Gold-stock ratio is bearish on stocks, indicating some long-term risks

Last week, MAG7’s AI profits exceeded expectations. AI is a growth story; tech stocks (for now) don’t care about high oil prices.

Credit spreads and volatility have collapsed, supporting a risk appetite rebound.

Sentiment and holdings have shifted to neutral; now it’s time to see if the breakout trend can hold.

Quiet Strong Market strategy balances volatility and market breadth to identify strong trends and manage risk environments. It’s a slow-moving strategy that doesn’t hedge against lower volatility but can navigate major trends well. Today, it remains a risk appetite for stocks.

The recent breakdown of the advance-decline line failed to continue higher. This may be short-term volatility, but if the line continues to stagnate, it indeed indicates broader issues in the S&P 500, perhaps as high oil prices start squeezing tail assets. This is definitely a risk factor to watch. Ideally, we want to see the advance-decline line break out and rise in the coming weeks.

As the Iran conflict continues, high oil prices remain a key risk to monitor. Sometimes a false signal, but usually good at capturing major risk-avoidance events. The key is duration. The longer oil prices stay high, the more risk accumulates. Returning to highs this month isn’t ideal. But 1 or 2 months of high oil prices (as we’ve experienced) are not enough; the risk accumulates when oil stays high for years.

For a century, a breakout in the gold-stock ratio has been a dangerous signal for the stock market. Its hit rate is extremely high. However, gold has struggled in recent months, but as long as this relative strength trend persists (like today), we must remain alert to stock market risks.

VIX is in an optimal position today. It’s also supported by the collapse in credit spreads. Broadly, you can categorize VIX into the following zones: VIX above 30 indicates fear, a sign of panic; moving below 30 (as today) is bullish. We saw this just a month ago.

The orange zone, especially when VIX is rising, signals future price volatility warnings. Relatively low VIX readings (like today) are strong risk appetite zones, typically the main backdrop for a bull market in stocks. That said, when VIX is too low, it can indicate complacency, serving as a warning again, but we are far from that today.

In short, VIX and credit spreads support the current breakout trend.

On the technical side, it’s helpful again because we just hit a new all-time high in the S&P 500. The context is also important. This new high occurred amid war, the Strait of Hormuz, lockdowns, soaring oil prices, and poor market sentiment. When prices react strongly to bad news, it’s a powerful bullish signal (the same applies to Bitcoin). Therefore, before the recent weekly resistance at 7,000 failed, the S&P 500 was in a risk appetite state. A weekly close below 7,000 would make the technical outlook quite poor; until then, riding the trend makes sense.

Conclusion

Bitcoin looks extremely strong here. It’s also supported by relative strength against all markets, having bottomed and outperformed since the Iran conflict began. Today, we see consistent strength in Bitcoin’s technical and fundamental data.

The stock market is more nuanced, with several warning signals flashing, mostly long-term warnings that require more recent bearish convergence to truly support a downturn. Additionally, we have a fresh technical line near 7,000; if it fails, it can be used to abandon ship.

Until then, the trend is your friend.

We may have just turned back.

Charles Edwards