Bitcoin in a Bull Market says new Grayscale Report

On Tuesday night Bitcoin achieved its highest price level in nearly two weeks, briefly hitting $71,722 before a sudden drop back to the $68,500 level. The bulls will have to fight to keep the previous all-time high of $69,000 steady as a support level before Bitcoin can make a fresh attempt to push higher. If the Bulls do manage to hold the line, history could be made. In four days’ time, if Bitcoin stays at its current level, Bitcoin will complete seven green monthly candles in a row, something that hasn’t happened previously.

Source: Brave New Coin Bitcoin Liquid Index

As we approach the end of March, Bitcoin finds itself on the cusp of fresh all-time highs. The resurgence of Bitcoin starkly contrasts with the somber atmosphere of the previous week, characterized by significant losses. The retracement from the recent peak near $73,000, reached 17% at one point, induced anxiety among traders. Although this correction remains relatively modest by bull market standards, it triggered apprehension across the market.

However, Monday’s rally hinted at a potential conclusion to the recent downturn in the cryptocurrency market. Last week, Bitcoin experienced a dip below $61,000 from its record highs above $73,000. Additionally, there was subdued interest in new U.S.-listed spot bitcoin ETFs, coupled with increased selling of Grayscale’s GBTC fund. Nonetheless, the robust surge on Monday suggested a shift in sentiment, potentially marking the end of the correction phase.

Grayscale’s Bitcoin Bull Market Report

In a new report released by Grayscale, historical indicators of the Bitcoin market cycle signal that the cryptocurrency market is currently in the midst of a bullish trend, propelled by a combination of robust fundamental and technical factors. The report highlights that previous crypto bull markets have often commenced with a surge in Bitcoin’s dominance, underscoring its pivotal role as a leading indicator for the broader cryptocurrency market. Typically, a rally in altcoins follows an uptick in BTC price, as investors seek higher returns by venturing into riskier cryptocurrencies, buoyed by profits from Bitcoin investments. While the outcome of the ongoing bull run remains uncertain, Grayscale maintains a cautiously optimistic stance, citing potential catalysts such as increased retail and institutional participation that could sustain the momentum of the cycle.

However, the report also expresses caution regarding the behavior of new spot Bitcoin ETF buyers. Historically, Bitcoin experiences drawdowns in every bull cycle, and it remains uncertain how these new buyers will react when faced with such downturns. Nonetheless, the current cycle has witnessed relatively minor drawdowns compared to previous cycles, providing some reassurance.

Contrasting sentiments are observed in retail investor interest, as reflected in cryptocurrency-related YouTube channel subscription rates. Although lower than the fervor seen during the 2020-2021 bull market, recent upticks in subscriber growth rates suggest a gradual resurgence of interest among retail investors.

Spot Bitcoin ETF flows and macroeconomic indicators emerge as the primary drivers shaping the near-term trajectory of Bitcoin’s bull cycle. Grayscale likens these forces to the two sides of a seesaw, with their influence fluctuating over time. Consequently, the report emphasizes the importance of monitoring these factors, which are likely to continue dictating Bitcoin’s market behavior.

Grayscale maintains unwavering confidence in Bitcoin’s performance as an asset class, supported by favorable market conditions and its established roles as a store of value and hard money. By maintaining a long-term perspective, Bitcoin is viewed as being in a strong position for sustained success.

$1 Million BTC

Cathie Wood, the CEO of Ark Invest, has hailed Bitcoin as a “financial superhighway,” highlighting its pivotal role in emerging markets. Speaking at the Bitcoin Investor Day conference in New York, Wood emphasized the significant use cases of the cryptocurrency, particularly in regions facing economic uncertainties.

Wood, whose firm recently launched a spot bitcoin exchange-traded fund (ETF) called ARKB, underscored Ark Invest’s focus on emerging markets and the global macroeconomic landscape. She noted the impact of the U.S. Federal Reserve’s interest rate hikes on the worldwide macro environment, describing it as a shock to the system.

Addressing the challenges faced by countries like Nigeria, where Bitcoin adoption is high due to currency depreciation, Wood characterized Bitcoin as both a risk-off and a risk-on asset. She highlighted Bitcoin’s appeal as a safe haven in times of economic turmoil while also acknowledging its potential for growth in risk-seeking environments.

Ark’s spot bitcoin ETF has emerged as one of the top performers among the ten funds launched in January. Wood expressed optimism about the future of Bitcoin, suggesting that with increasing institutional participation, the cryptocurrency’s price could soar above $3.5 million. However, she refrained from providing a specific price target, emphasizing instead the long-term potential of Bitcoin.

“Bitcoin has miles to go,” Wood remarked, referencing her previous price target of $1.5 million. Her comments reflect the growing confidence in Bitcoin’s trajectory and its ability to navigate the evolving landscape of global finance.

Earlier this month in an interview with the New Zealand Herald, Wood unveiled updated expectations for institutional involvement in Bitcoin’s price growth. She highlighted the transformative impact of the United States’ first spot ETFs on Bitcoin, emphasizing that even ARK Invest has adjusted its bullish stance on the cryptocurrency. The recent regulatory approval from the U.S. Securities and Exchange Commission (SEC) for ETFs has accelerated the timeline for Bitcoin’s price appreciation, according to Wood.

Ark’s price forecast has been $1 million per BTC by 2030. The forecast has been brought forward. “That target was before the SEC gave us the green light, and I think that was a major milestone, and it has pulled forward the timeline,” Wood explained. “Our target is now above that; it’s well above that, and with our new expectations for institutional involvement, the incremental price that we assume for institutions has more than doubled,” she revealed.

Wood’s sentiments were echoed by MicroStrategy’s Executive Chairman Michael Saylor, who emphasized to CNBC, Bitcoin’s potential to surpass gold as a store of value. Saylor announced his company’s purchase of an additional 9,245 bitcoins, bringing MicroStrategy’s total holdings to 214,246 BTC, more than 1% of the total supply.

Source: X

With the price increase, Bitcoin’s market cap surged above $1.3 trillion, making it the world’s ninth most valuable asset and equal to silver in market capitalization. However, it still has a considerable gap to bridge before catching up to gold, which boasts a market cap of $14.7 trillion.

In other Bitcoin news ETFs Continue To Drive BTC Price

Bitcoin’s strength should be matched by new ETF inflows this week, after a quiet week last week, marked by steady outflows. These were driven by record outflows from the Grayscale Bitcoin Trust (GBTC), due to selling by bankrupt crypto lender Genesis. Now, commentators are hoping for a return to “business as usual.”

After last week saw a net outflow each day from the US Spot Bitcoin ETFs, the data for this week is more positive. Monday was an excellent day with net inflows of more than $400 million. Leading the charge was the Fidelity Bitcoin ETF with its largest day of gains in 14 days, a healthy $279.1 million in daily inflows. With $73 million in inflows, Ark 21Shares Bitcoin ETF fund had its best day since March 12, while Invesco Galaxy, Franklin Templeton and Valkyrie all saw more than $26 million worth of inflows across their ETFs. Grayscale’s Bitcoin Trust (GBTC), however, continued a consistent run of outflows, with a Monday outflow of $212 million. 

Bitcoin’s record price run completes an impressive comeback after a brutal bear market and an unfortunate string of bankruptcies, and fraud cases during the past two years. Most other cryptocurrencies, including memecoins have also benefited from the rally across the crypto market.

The run back to new all-time highs was triggered by the approval of a number of Bitcoin Spot ETFs in the U.S. offered by big financial names such as Fidelity and BlackRock. Eric Balchunas, Bloomberg ETF analyst said, “Today is a big moment for Bitcoin but I’d argue just as big a moment for ETFs. The move from 25k to 69k was all or close to all due to ETF approval hopes and/or flows and arguably warranted IMO, ETFs (and its ecosystem) so damn good at taking something and making it liquid, cheap, convenient and standardized. Both the ETFs and Bitcoin mutually benefit one another.”

Hashdex Enters Bitcoin ETF Market

Asset manager Hashdex has officially entered the spot Bitcoin exchange-traded fund (ETF) market in the United States by completing the conversion of its futures ETF to hold spot Bitcoin. In an announcement, Hashdex revealed that it has renamed and converted its Hashdex Bitcoin Futures ETF to the Hashdex Bitcoin ETF, which will be traded under the ticker “DEFI.” This conversion aligns with the Fund’s revised investment strategy, allowing it to hold spot Bitcoin and track a new benchmark index effective March 27, 2024. The newly converted fund will allocate at least 95% of its assets to spot Bitcoin, with the remaining 5% designated for CME-traded Bitcoin futures contracts and cash equivalents, as stated by the firm.

Marcelo Sampaio, co-founder and CEO of Hashdex, expressed the firm’s belief in Bitcoin as a generational opportunity. He emphasized the excitement of inviting investors, regardless of their level of conviction in Bitcoin, to join Hashdex in its long-term journey of making digital assets accessible. Samir Kerbage, Hashdex’s chief investment officer, echoed Sampaio’s sentiment, encouraging investors to consider an allocation to Bitcoin and participate in Hashdex’s mission of democratizing access to digital assets.

Source: Bloomberg

Also of note, is that this is the first time that Bitcoin has achieved a new all-time high before the Bitcoin halving event. Popular Technical analyst Rekt Capital said, “In previous cycles, BTC/USD took around 500 days to hit new all-time highs after a halving. Something to consider as we enter a new era for Bitcoin’s price action — we’ve never really seen price action like this before.”

Trump and Ackman Soften Stance

In a surprising turn of events, former U.S. President Donald Trump voiced support for Bitcoin during a CNBC appearance, acknowledging it as an “additional form of currency.” He said, “There has been a lot of use of that [bitcoin] and I’m not sure that I would want to take it away at this point.”

Trump’s remarks mark a notable shift from his previous characterization of Bitcoin as a “scam” that threatened the U.S. Dollar. He also hinted at the need for regulation to address Bitcoin’s growing influence.

Meanwhile, Bill Ackman, founder and CEO of Pershing Square Capital Management, offered a speculative take on Bitcoin’s future, envisioning a scenario where its price could skyrocket indefinitely. Ackman’s comments sparked a lively debate within the Bitcoin community, with Michael Saylor inviting him for a direct discussion on the topic.

As Bitcoin continues its upward trajectory, fueled by institutional interest and changing perceptions, the cryptocurrency landscape remains dynamic and ripe with potential. Investors eagerly await further developments as Bitcoin aims to solidify its position as a mainstream asset class.

Google Search Trends Are Up

Google Search Trends for Bitcoin have increased sharply this month after Bitcoin reached new all-time highs. However, Data shows that worldwide searches for Bitcoin are yet to hit the highs seen in the 2021 bull market.

In previous bull markets, Google Search Trends have increased sharply while the Coinbase app has made it to the number 1 spot in the Apple App Store at the peak of the market, a good indicator of a potential top. Coinbase is currently ranked at 222, up from 230 last week.

A Word of Caution

Finally, a note of caution from BlockTower’s CEO Ari Paul. Paul wrote on X last week, “Every crypto cycle, I turn pessimistic Cassandra around here (in public warnings).  My best guess is that today equates not to October 2021, but more like January 2021. Still think we have 4 innings left in the 9 inning bull market, but… time to start steeling the backbone and psychologically preparing to do a really hard thing – to turn bearish when (almost) everyone is losing their minds as max bullish and the news is purely positive. And also worth noting… we’re *already* in a bubble by many metrics.  Plenty of risks already, particularly in more speculative plays.  For clarity – I’m just starting to *prepare* psychologically to be bearish.  The right time might be 2 years away, but I find game-planning and ‘practicing’ contrarian thinking to be critical to making the right contrarian call in real-time.”

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