The Bitcoin (BTC) price increased from $7,700 to $9,500 overnight, increasing by 23%, according to Coinmarketcap, in less than 24 hours.

The three main factors that catalyzed Bitcoin’s recent rally are record-high spot exchange volume, a breakout above historical resistance levels, and a noticeable rise in institutional demand.

Spot exchanges drove Bitcoin to $9,500, not the futures market

In crypto, the term spot exchange refers to a platform that facilitates fiat to crypto trades. On Binance and Coinbase, for instance, users can trade Bitcoin with USD or stablecoins like Tether (USDT) without leverage.

Volumes coming from spot exchanges are not inflated by leverage or borrowed capital. Spot volumes typically demonstrate authentic retail demand and they often increase during an accumulation phase.

Unlike past rallies, the recent upsurge of Bitcoin was primarily led by spot volumes. Binance and Coinbase saw record high daily volumes, as shared by Binance CEO Changpeng Zhao.

Binance daily volume reaches $12.5 billion. Source: Changpeng Zhao

The demand for Bitcoin on Coinbase reached a point where the exchange could no longer handle user activity for a temporary period.

All the while, the open interest of Bitcoin futures on BitMEX stayed below $500 million. The open interest of Bitcoin on BitMEX, which refers to the total amount of short and long contracts open in the market, remained above $1 billion in February 2020.

The relatively low volume of Bitcoin on futures exchanges and the dominance of spot platforms indicate that the upsurge from $7,700 to $9,500 was organic.

Historical BTC levels were broken with ease

According to a cryptocurrency trader known as Benjamin Blunts, the Bitcoin price broke all major historical resistance levels when it first surpassed $8,000.

The 100-day and 200-day daily moving averages (DMA) and the 0.618 Fibonacci Retracement level were all broken simultaneously.

Key Bitcoin technical levels broken overnight. Source: Benjamin Blunts

“And there it is. the test of the 0.618 fib, the 100 and the 200 daily moving averages all in one fell swoop,” Blunts said. “Question is what happens from here.”

When Bitcoin surpasses important resistance areas without any pullback, it indicates that a stronger upside movement awaits. Consequently, when BTC first hit $8,000, it went up to as high as $9,500 swiftly.

Institutional demand acted as a safety net

In the first quarter of 2020, the key narrative around Bitcoin was the accumulation of Bitcoin by institutional investors.

The quarterly report of Grayscale, which operates the Grayscale Bitcoin Trust, said that 88% of investments came from institutions. In the same period, the assets under management (AUM) of the Grayscale Bitcoin Trust just hit $3 billion, according to its CEO Barry Silbert.

“88% of inflows this quarter came from institutional investors, the overwhelming majority of which were hedge funds,” said the investment firm.

Inflow of capital into Grayscale’s cryptocurrency investment vehicles. Source: Grayscale

The gradual increase of inflow in capital into institutional products of Grayscale since January 2020 indicates that institutions consistently invested in Bitcoin throughout the first quarter.

A significant increase in organic retail demand resulting in surging spot volume, the breach of key resistance levels, and the accumulation of institutions created a perfect storm for Bitcoin ahead of halving, pushing it above $9,000.