Goldman Sachs: What changes have occurred in the market structure after Bitcoin (BTC) reached a new high?

Since mid-May, Bitcoin has been trading in a narrow range between $100,000 and $112,000, hitting a historical high of $123,200 yesterday. Last weekend, the coin approached the year-to-date resistance level of $112,000 and broke through $114,000 on Thursday, with this week's closing price at $118,000. On Monday's Asian morning session, Bitcoin continued to break through the $120,000 mark and set a new historical high of over $123 later that day (up 14% this week). Since then, the Crypto Assets have retraced by 5% to a level of $117,000.

(Source: ZeroHedge)

So far this year, Bitcoin's market dominance has been steadily rising, currently at 66.4%, while Ethereum is the only lagging asset, accounting for 10.1%. Since tariffs were imposed on Liberation Day in early April, the total market cap of Crypto Assets has grown by $900 billion, now reaching $3.74 trillion. Despite BTC reaching an all-time high, the total market cap of Crypto Assets is still below the January 2025 peak of $1.6 trillion. Goldman Sachs' Crypto Assets research team further analyzed what aspects of the market structure have changed and which have not as Bitcoin set new historical highs.

1. What changes have occurred: Strong demand for spot, increased corporate reserves

Goldman Sachs' analysis indicates that the Bitcoin market structure has undergone several significant changes recently:

Spot Trading Volume Surge: The rise in Bitcoin prices last Thursday and Friday was supported by strong spot trading volume, with Friday's spot trading volume exceeding $20 billion (Coinmetrics). This indicates that the recent pump was driven by real buying interest rather than mere speculation in the derivatives market.

US Spot Bitcoin ETF Fund Inflow: Last week, the average daily trading volume of the US spot Bitcoin ETF was quite considerable, reaching 6.5 billion USD, with BlackRock's IBIT ETF accounting for 80% of the flow (Bloomberg). The US Bitcoin ETFs currently hold over 145 billion USD in assets, with IBIT accounting for 85 billion USD (Bloomberg). In the first two weeks of July, the net inflow into the US spot BTC ETF reached 3.39 billion USD, with a significant portion of the inflow occurring at the end of last week, coinciding with Bitcoin breaking through the upper boundary of the range. This indicates that institutional funds are entering the Bitcoin market on a large scale through ETFs.

Companies are incorporating crypto assets into their treasury: Last quarter, one of the sources of increased spot demand was that more and more companies were allocating crypto asset exposure to their government bonds. According to reports, publicly traded companies purchased 131,000 Bitcoins ($15.3 billion) in the second quarter, increasing their total exposure to about 855,000 Bitcoins ($100 billion). This indicates that companies' acceptance of Bitcoin as a reserve asset is on the rise.

Changes in Bitcoin Supply on Exchanges: The available supply of Bitcoin on exchanges significantly increased to 2.7 million BTC in May. However, the active Bitcoin supply over the past year has been gradually decreasing over the past few years, with only 38.2% of the total BTC supply having been transferred on-chain in the past year. This may reflect the confidence of long-term holders (HODLers) and the relatively reduced quantity of Bitcoin available for trading in the market.

Perpetual Futures Positions Reach All-Time High: Last week, the BTC positions held in perpetual futures through native Crypto Assets exchanges grew strongly from $30 billion to $34.9 billion (setting a new all-time high). This indicates that traders' leveraged long bets on Bitcoin have reached unprecedented levels.

II. What has not changed: Volatility and Basis Stability

Despite the significant fluctuations in Bitcoin prices, Goldman Sachs' analysis has also pointed out some unchanged market characteristics:

Implied Volatility Stability: Last week, the price of Bitcoin rose from $108,000 to $123,200 (up 14%), then fell back to $117,000 (down 5% from the high). Despite these fluctuations in the underlying asset, the implied volatility has remained almost unchanged. The 1-month implied volatility of Bitcoin has been gradually decreasing year-to-date, dropping from 60 in January to a low of 35 in early July, and has slightly increased to 39 now. This indicates that the market's expectation of future volatility is relatively stable.

Risk Reversal Rate Decrease: The risk reversal rates for all durations have actually decreased in sync, from 2.5 for call options to 1.5 (GS Trading). This may indicate that the market's demand for call options has relatively decreased, or the demand for put options has increased, reflecting a cautious market sentiment.

Futures Basis Stability: As the BTC spot price rises, the implied financing ratio between the spot and near-term futures has also slightly increased to 10%. However, the longer-term basis remains stable at around 7.5%. This indicates that although there are arbitrage opportunities in the short term, the long-term market expectations for Bitcoin are relatively rational.

Conclusion:

Goldman Sachs' analysis reveals subtle changes in the market structure following Bitcoin's historic high. The increase in spot demand and corporate reserves shows that Bitcoin is gaining broader institutional recognition. However, the relative stability of implied volatility and futures basis also indicates that the market remains cautiously optimistic about its future trends. This report provides investors with valuable insights into understanding the dynamics of the Bitcoin market.