Institutional Storm Buying Absorbing 5x Mining Volume, Will It Lead Bitcoin to Break $88,000?

▲ Bitcoin (BTC) Investment ©Godasol

The frightening appetite of institutional investors is causing an extreme supply shortage, devouring five times the daily mined volume, leading the flagship cryptocurrency Bitcoin (BTC) to break past $81,000 in one go with a powerful rally that liquidates short sellers in succession.

According to investment media outlet FXStreet on May 5 (local time), the total market capitalization of virtual assets has reached $2.67 trillion, hitting a new high since early February. However, rather than the entire market rising in unison, a clear differentiation among assets is evident: Toncoin (TON) surged by 29%, Algorand (ALGO) by 4.5%, and Basic Attention Token (BAT) by 4%, leading the sharp gains, while Dash (DASH) and Aptos (APT) fell by 5.5% and 2.1%, respectively.

Bitcoin rebounded sharply in just four hours, overcoming Monday's downward pressure, and climbed 1.3% over the day to reach the $81,000 mark. 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, the 6th 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 in the spot market, strongly supports the price surge. According to Capriole Investments, institutional investors are scooping up more than 500% of the newly mined Bitcoin supply daily. Historically, such extreme supply shortages have led to price surges of approximately 24% over the following month. Michael van de Poppe, founder of MN Trading, also assessed that with Bitcoin breaking past $80,000, the path for further short-term increases to $86,000-$88,000 has opened up.

The Bitcoin network and the broader regulatory environment are also sending positive signals. Recently, Bitcoin mining difficulty adjusted down by 2.3% to 132.47 T, and Glassnode's 7-day moving average hash rate is stably recording approximately 955 EH/s. Furthermore, the U.S. cryptocurrency market structure bill, the Clarity Act, which Senators Thom Tillis and Angela Allsbrooks reached a full agreement on stablecoin yields, is set for review by the Senate Banking Committee during the week of May 11, expected to significantly reduce market uncertainty.

Meanwhile, the virtual asset investment sentiment index has reached a critical turning point, hitting the median value of 50 for the first time since January 17. The media reported that given the precedent since last October, where every short-term surge in the sentiment index provided favorable high-point selling opportunities for sellers, market attention is 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.

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