Spot Buying Propels Bitcoin Higher amid Cooling Speculation
Bitcoin changed hands at US $106,639, less than 2 percent shy of December’s all-time high. Daily turnover on Coinbase, Binance and LMAX Digital reached US $10.9 billion, 12 percent above the 30-day average, yet perpetual-swap funding on the same venues hovered around 0 percent.
Futures open interest is a record US $34 billion, but the cost of holding those contracts is negligible—evidence that cash buyers, not leverage, are driving price discovery. Realised volatility has slid into the mid-30 percent range, about one-third of its 2021 peak, while 10-day implied volatility now tracks below the S&P 500. U.S. spot-Bitcoin ETFs amplify that calm bid: they absorbed US $667 million of net inflows on 19 May—their strongest day this month—and have drawn US $1.8 billion since 1 May.
Glassnode’s realised-capitalisation metric has climbed past US $900 billion for the first time, and long-term holders (coins dormant >155 days) have added 339 k BTC since early April, pushing their stash to an unprecedented 14.37 million BTC. Coins are being purchased at record prices and then vanishing from circulation, compressing the free float and damping price swings.
Structural Shifts Siphon Speculative Leverage
Three forces explain the diminished role of fast money. First, the cash-and-carry trade born of ETF issuance has widened to about 9 percent annualised, enticing proprietary desks to lock in that basis instead of running outright longs; every dollar entering that trade removes an incremental unit of leverage from perpetual markets. Second, banks are finally opening direct spot channels: JPMorgan’s green light this week for U.S. wealth-management clients to buy Bitcoin outright delivers a pipeline of discretionary capital that bypasses derivatives entirely.
Third, macro hedging demand is rising. With five-year U.S. real yields still negative and tariff uncertainty reviving inflation fears, digital-asset funds have attracted US $5.5 billion in three weeks, eroding gold’s dominance as the default hedge. These flows all land in spot, not leverage, and their arrival suppresses funding even further. Matrixport’s quant desk now tracks a −0.64 two-week correlation between ETF inflows and global funding rates: every US $100 million entering ETFs knocks roughly 0.0013 percentage points off funding. A virtuous circle follows—lower funding tempers forced liquidations (just US $246 million in the past 24 hours versus multi-billion spikes last March), which keeps realised volatility low and broadens the pool of investors willing to hold spot.
Funding–Flow Correlation Guides Short-Term Path
History suggests that spot-led rallies last until funding turns decisively positive. In 2021 the tipping point was about +0.05 percent; today we are at one-tenth that level. If funding merely drifts back to +0.02 percent while ETF inflows remain in the US $400–700 million-per-day range, incremental daily demand of roughly 4,000 BTC could lift spot toward US $120,000 before quarter-end. The downside hinges on leverage snapping back: a jump in funding above +0.03 percent and daily liquidations breaching US $1 billion would flag a return of momentum traders and elevate the probability of a mean-reversion slide to the US $92,000 area, aligning with the 50-day moving average and the 38 percent Fibonacci retracement of the entire 2024–25 advance. Dollar liquidity remains a wildcard: sudden tightness in cross-currency basis swaps has twice triggered wholesale deleveraging across crypto this year, even when spot flows were dominant.
Portfolio Implications: Favour Delta-One Carry
Risk-adjusted metrics currently favour unlevered exposure. With basis at 9 percent and 30-day realised volatility producing a Sharpe ratio of 2.1, a simple spot position outperforms a three-month delta-neutral carry strategy. Options desks are exploiting suppressed implied vols via ratio call spreads—buying one July 105 k strike and selling two July 120 k strikes—for a net debit under 2 percent of notional; the structure benefits from an orderly grind higher while limiting premium bleed if volatility falls further. Investors should keep an eye on the funding–flow correlation: rising ETF inflows that fail to push funding lower would signal that leverage is creeping back, increasing left-tail risk. Until that inflection arrives, the path of least resistance remains higher, and pullbacks are apt to be shallow and brief—an environment that rewards disciplined accumulation over leveraged chase.