According to market analysis firm Reflexivity Research, Bitcoin’s (BTC) performance this year sets a precedent for previous 4-year market cycles and signals the start of another potential bull market.
The company released a report this week examining the drivers of the asset’s strong second-quarter performance, examining both market structure and on-chain data.
Who Buys Bitcoin?
As the report states, Bitcoin’s current tailwind comes from two key events this year: the Silicon Valley Bank (SVB) banking crisis in March and BlackRock’s filing for a Bitcoin spot ETF in June.
Each event has “brought digital gold unequal advantages compared to other digital assets in the market,” the report said. Bitcoin now accounts for over 50% of the total cryptocurrency market cap, and bulls like Michael Saylor are forecasting bigger highs as regulatory action drains capital from altcoins.
The outsized interest in bitcoin is visible in the futures market, where bitcoin perpetual futures are “moving significantly away from ether perpetual futures.”
Bitcoin Perpetual Futures vs. Ether Perpetual Futures. Source: Glassnode
Growing interest in bitcoin appears to be primarily coming from the United States, where BlackRock’s recent filing could see the country’s first official bitcoin spot ETF. The report notes that most of Bitcoin’s performance since the asset manager’s filing has occurred during US trading hours.
Additionally, bitcoin CME futures open interest is up $1 billion since filing, another indication of higher activity from U.S. firms.
A look at the chain
In terms of network data, the researchers highlighted Ordinals as a “space to watch in the coming quarters.” The total number of ordinal inscriptions now stands at nearly 15 million, with miners earning an additional US$56 million in fees to date.
The number of Bitcoin addresses holding more than 1 BTC surpassed 1 million for the first time this quarter, and the network has processed roughly $2 trillion worth of transactions during that period.
Echoing insights from other companies, including Glassnode and Santiment, Reflexivity said that bitcoin supply held by long-term holders is now relatively high, meaning market participants have no plans to sell their coins anytime soon.
“Should some of these ETFs be approved, with available supply near record lows, the impact of newfound demand could be very strong,” the company wrote.
However, a black swan event is still on the horizon.”[It] “It appears to be an early innings for this current bull cycle and the possibility of retesting cycle lows similar to March 2020 still exists,” the report concluded.
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