Europe Leads Bitcoin Rally as US Demand Falters

Bitcoin's price surge in recent weeks has been largely driven by European demand, with the continent's market gaining 4% since early September, while the US market has declined by 3%. The price of Bitcoin has climbed from around $75,000 in mid-September to over $87,000, before stabilizing in the $83,000 to $85,000 range.

The Coinbase Premium Index, which compares the price of Bitcoin on Coinbase to global platforms like Binance, has been negative for 29 consecutive days, indicating that US investors are bidding below the rest of the world. This is a departure from the usual trend, where US investors pay a premium to get their hands on Bitcoin.

While ETF inflows in the US have been strong, with net inflows of around $2.39 billion in the week of September 21-25, this may be a case of uneven demand rather than uniformly strong interest. The launch of the first euro-hedged Bitcoin exchange-traded commodity (ETC) in Europe may also be a sign that European investors are seeking reduced volatility exposure.

The contraction in apparent demand is a cautionary sign, with a drop of around 170,000 BTC in spot demand over 30 days suggesting that the price surge may have been built on thinner support than the price chart implies.