Today, 24th March 2024, there is so much Fear, uncertainty and doubt displayed in the market place after Bitcoin retracted in March and the entire Crypto market is at the time of writing in a sideways pattern, up and down but clearly not going anywhere right now. Many investors ask themselves whether Bitcoin has peaked already for this cycle.
But what is actually happening with Bitcoin today?
CryptoQuant foresees a surge in market activity as evidenced by a rapid uptick in active addresses. However, their analysis indicates that this anticipated spike has not materialized as of yet.
A bull market is characterized by a phase wherein investor demand outpaces the available supply, fostering heightened market confidence and upward price trajectories.
Despite the substantial promise exhibited by the ongoing bull market, indications suggest that its apex remains elusive, according to on-chain metrics.
Bull Market Momentum Continues Unabated Bitcoin presently trades at $67,500, showcasing an impressive 205% surge over the past twelve months.
Nevertheless, experts suggest that we are still in the nascent stages of the Bitcoin bull market, poised to extend well into 2025.
The forthcoming introduction of spot ETFs this year, coupled with the impending halving event known to historically spur further price escalation, further underpins the prevailing bullish sentiment.
CryptoQuant’s recent analysis echoes a similar sentiment, indicating that the cryptocurrency market has yet to scale the summit of the ongoing bull cycle. Their evaluation centers on the volume of active Bitcoin addresses, a pivotal metric for assessing investor engagement.
Historically, this metric tends to surge twice within a cycle: once as a bear market transitions into a bull phase and again as it nears its zenith. In early 2023, this indicator heralded the conclusion of the bear market.
Presently, with the volume of active addresses implying that the market is amid a bull cycle, it is evident that the peak remains beyond reach.
CryptoQuant anticipates that the market will eventually venture into the overheating zone, characterized by a swift uptick in active addresses. However, as per their analysis, this juncture has yet to materialize.
$300,000 Projection for Peak of Subsequent Bull Cycle William Quigley, co-founder of Tether, ventured a bold prediction this week, suggesting that Bitcoin could potentially surge to $300,000 during the pinnacle of its forthcoming bull run. In an interview with CNBC, Quigley asserted that if historical precedents persist, Bitcoin could soar an additional 350% from its current levels.
“I’m not making a prediction, I’m simply pointing out that if historical trends hold, it would imply Bitcoin surpassing $300,000 at the peak of this forthcoming bull market.”
Similar sentiments were expressed by the author of the book “Rich Dad, Poor Dad,” who anticipates BTC catapulting to $300,000 in the coming months.
The coming Bitcoing Supply Crunch
Yes it is going to happen anytime soon.
The introduction of the inaugural spot Bitcoin (BTC) exchange-traded funds (ETFs) in the U.S. marks a monumental milestone for the crypto world. This development not only bestows a newfound legitimacy upon digital assets but also triggers a notable reduction in BTC supply on the open market, as companies swiftly acquire tokens at a rate ten times faster than their mining.
To delve into the repercussions of this supply scarcity on market participants, Kitco Crypto recently engaged in a discussion with Laurent Benayoun, CEO of Acheron Trading, a digital asset market-making firm, and a mentor for the Harvard Blockchain Incubator.
Acheron Trading plays a multifaceted role, serving as a principal market maker through a loan and collection model, a designated market maker via a retainer-based approach, and also offering a Software-as-a-Service (SaaS) product that enables them to license their algorithms and trading infrastructure to other institutional players in the digital asset market.
When questioned about the changes witnessed at Acheron amidst the current bull market over the past three months, Benayoun remarked, “We are witnessing intriguing developments entering the treasury, to be completely transparent.”
“There’s been a surge in activity, primary listings are skyrocketing, and initial listing multiples on price discovery have tripled compared to a year ago,” he elaborated. “Volumes have surged over 150% from last year. Previously, price discovery lasted for a day and a half; now, it extends to six days. So, the metrics are exceedingly positive.”
As a market maker, Acheron primarily caters to token issuers, aids in recapitalizing exchanges, and also serves other market makers through their SaaS solution, he elucidated.
Transitioning to the subject of inflows into spot BTC ETFs, Benayoun highlighted the ongoing trend of funds migrating from futures ETFs to spot ETFs, alongside outflows from Grayscale Bitcoin Trust (GBTC) into other spot ETFs.
“This is primarily due to the expense ratio, or the issuer’s fee structure based on the assets they manage,” he elucidated. “Firms like BlackRock and Fidelity exhibit fierce competition in terms of fees, and an increasing number of asset managers are beginning to offer ETF access. Recently, news circulated regarding Arizona’s contemplation of permitting Bitcoin purchase by retirement accounts, underscoring the significant influx of institutional Traditional Finance (TradFi) capital into Bitcoin.”
This influx, Benayoun emphasized, has had a cascading effect that has bolstered altcoin prices, with no indications of abating.
“We’ve encountered forecasts suggesting Bitcoin could surge as high as $200,000 this cycle, owing to this substantial influx of buying power and demand,” Benayoun asserted.
When probed about his personal stance on whether BTC could reach such heights or even surpass them, Benayoun drew upon the total money supply to expound his rationale.
“There’s a shortcut to assessing this by examining the total money supply worldwide – the issuance of money by governments – and contrasting it with the 21 million Bitcoins,” he explained. “Considering Bitcoin’s fractionalization by ten to the power of eight in terms of decimals, it seems attaining millionaire status in the Bitcoin realm necessitates holding just one Bitcoin. This would equate to holding $1 million, given the current currency money supply. Hence, $200,000 is within the realm of possibility.”
Moreover, considering the insufficiency of Bitcoins for every millionaire globally to possess one, Benayoun underscored the plausibility of Bitcoin’s overall ascent, especially factoring in variables such as inflation and money supply increases.
Addressing concerns among crypto enthusiasts regarding the fate of altcoins amidst institutional focus on Bitcoin, Benayoun refuted such apprehensions, emphasizing the pronounced rotation into altcoins already observed in the market.
“Beyond altcoins, we’ve witnessed meme coins soaring, indicating significant retail presence, as institutional players are unlikely to engage in such trades,” he remarked. “Despite narratives of retail setbacks post-2017’s ICO boom or the 2020-2021 NFT and DeFi fervor, retail participation remains robust.”
Additionally, he pointed out that despite the emphasis on institutional investors, the majority of institutions and registered investment advisors have yet to commence recommending Bitcoin exposure via ETFs to their clients.
“These large institutions operate as sluggish entities,” he remarked. “It takes time to integrate new products and for clients to acclimate to them. Thus, we haven’t realized the full potential of ETFs yet.”
Benayoun highlighted the intriguing imbalance between inflows and outflows, noting that ETF trading volumes surpass billions daily, with each day exceeding the preceding day’s record.
As discussions veered toward Bitcoin liquidity, Benayoun underscored analysts’ attention toward a potential supply crisis as Bitcoin availability on exchanges and over-the-counter desks dwindles, potentially propelling Bitcoin’s price upward.
“In the aftermath of FTX’s collapse, we observed a reduction in centralized platform holdings, leading to thinner order books,” he observed. “This, coupled with soaring demand, has heightened volatility, contrary to predictions that institutional influx would narrow volatility bands.”
He further elucidated on the impact of ETFs, predicting that options on these ETFs would further boost liquidity, courtesy of the Delta hedging strategy.
Delta hedging involves options recipients hedging the value of those options as a form of protection. “This strategy entails selling as call option prices rise and buying as they fall. From a liquidity perspective, this strategy is poised to escalate volatility,” he opined.
When asked about the potential impact of heightened demand on Bitcoin’s historical pullbacks of 50-80 percent, Benayoun expressed uncertainty, citing factors such as asset managers’ reactions to significant retracements.
“It’s challenging to predict,” he conceded. “If asset managers, like JPMorgan and Merrill, respond uniformly due to similar forecasts, we may continue witnessing substantial pullbacks. We’ll have to observe how reality unfolds as the cycle progresses.”
Touching upon the inevitability of market cycles, Benayoun highlighted the likelihood of this bull market cycle’s conclusion. He cited two contrasting mindsets prevalent in the crypto community, particularly among Bitcoin holders.
“You have maximalists, focused on maximizing Bitcoin holdings, foreseeing government money inefficiency and skyrocketing inflation,” he elucidated. “Conversely, some individuals are merely in it for the ride, aiming for gains in fiat terms. This dichotomy explains the regular pullbacks witnessed.”
Benayoun anticipates continued retracements to facilitate accumulation by individuals adhering to the maximalist mindset.
Reflecting on Bitcoin’s anomalous climb to a new all-time high over 45 days before its halving, Benayoun acknowledged the peculiarities of this cycle.
“This cycle’s idiosyncrasies are evident,” he remarked. “Previously, the ATH wasn’t reached for several months after the halving, whereas now, it precedes the halving, an unprecedented occurrence.”
Benayoun speculated on the implications of the halving, particularly its impact on network fees and the advent of NFTs on the Bitcoin network.
“The interplay between halving-induced price appreciation and network fee escalation presents a unique dynamic,” he observed. “These competing mechanisms potentially mitigate the blow of reduced block rewards on miners.”
He emphasized the positive implications of the halving for Bitcoin and the broader industry, considering the confluence of factors.
“I don’t believe we’ve entered the actual bull run yet, despite hitting a new all-time high,” he asserted. “There’s ample momentum yet to unfold.”