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Bitcoin reached a new all-time high of $93,495 this week, driven by post-election optimism and a surge in institutional interest. The cryptocurrency has gained 14.3% in the past week and is up an extraordinary 105.8% year-to-date, solidifying its position as the top-performing asset class of 2024. With a market capitalization of $1.8 trillion, Bitcoin has now surpassed the total market value of silver, marking a historic milestone in its journey toward broader recognition.

Analysts attribute the rally to a confluence of factors, including robust inflows into Bitcoin exchange-traded funds (ETFs), elevated leverage trading activity, and a significant increase in stablecoin issuance. 

Greg Cipolaro, Global Head of Research at NYDIG, explained in a recent report that the rally reflects a mix of long-term bullish sentiment from traditional market participants and strategic arbitrage by hedge funds.

Funding rates on perpetual swaps, a key tool for leveraged crypto trading, have surged to levels not seen since March. This indicates growing optimism among traders, although the rates remain below the euphoric peaks reached earlier this year. 

CME-listed Bitcoin futures are also experiencing heightened activity, with the annualized difference between futures and spot prices — known as the basis — hitting mid-teens percentages. Despite this enthusiasm, open interest in Bitcoin futures has only risen modestly, reflecting some caution among traders in deploying leverage.

According to the report, spot Bitcoin ETFs have gathered $4.4 billion in net inflows since the election, with over 70% of that amount going to BlackRock’s iShares Bitcoin Trust. 

The total spot Bitcoin ETF market has now attracted $27.8 billion in inflows since its launch earlier this year. While retail investors and family offices are using ETFs to express bullish views, hedge funds are leveraging these instruments for arbitrage strategies, pairing ETF purchases with short positions in futures to capitalize on price discrepancies.

Cipolaro noted that Bitcoin’s rally comes at a time when digital assets are becoming a politically significant topic. He suggested that the cryptocurrency is benefiting from its newfound relevance in policy discussions, which could provide additional support for its long-term trajectory.