Here’s Why The Bitcoin Bottom Is In, New Highs Imminent: Crypto Expert
June 26 2024 - 4:30AM
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Crypto expert Duncan (@FloodCapital) recently expressed a strong
conviction that Bitcoin has reached its market bottom and is poised
for new all-time highs. His analysis, shared on X (formerly
Twitter), provides a detailed examination of the current market
dynamics and underlying fundamentals that signal a bullish turn for
Bitcoin and potentially other cryptocurrencies. Is The Bitcoin
Bottom In? In his in-depth analysis, Duncan pointed out that the
crypto market has been underperforming relative to equities over
the past few weeks. This trend was a concern until a pivotal
development emerged concerning Mt. Gox. Duncan noted, “Yesterday’s
Mt. Gox headline provided a reasonable explanation for the recent
market behavior.” The expectation of billions of Bitcoin being
distributed to creditors had been anticipated by insiders, leading
to a temporary market dip. Related Reading: Spot Bitcoin ETFs See 7
Consecutive Days Of Outflows, Here’s What Happened Last Time The
situation was analyzed in depth by Alex Thorn, Galaxy Digital’s
Head of Research, who suggested that the selling pressure from this
event might be less severe than initially feared. As Duncan
explained, “We’ve swept the range lows, leading to about $300M in
long liquidations.” While these figures are significant, they are
modest compared to the liquidation events in March and April, where
more than $750M was liquidated in three different 24-hour periods.
This suggests a cooling market, which is also evidenced by reduced
altcoin open interest, lower funding rates, and a less bullish
options skew. Duncan observed that the sentiment on Crypto Twitter
is “literally the worst I’ve ever seen it,” despite Bitcoin being
less than 20% off its all-time highs. This sentiment is rooted in
the traumatic experiences of crypto natives who, having witnessed
the altcoin boom outperforming Bitcoin and Ethereum in 2021, tried
to anticipate a similar pattern this year but were met with a
drastically different market structure. The influx of capital into
Bitcoin has been significantly influenced by the ETF developments,
with Blackrock applying for an ETF in June 2023 when Bitcoin was
priced at $26,000. The approval and subsequent inflow of $14.3
billion into the ETF marked a stark contrast to previous years
dominated by decentralized finance (DeFi) and high consumer
interest in altcoins. “This year, the capital is heavily skewed
towards Bitcoin, influenced by its perceived stability and the
formal financial product structure of ETFs,” Duncan elaborated.
Related Reading: Is The Bitcoin Bottom In? Here’s What 7 Experts
Say On the fundamental side, Duncan highlighted Blackrock’s
strategic movements within the crypto space. “With $17 billion in
IBIT and at a 25bps fee, Blackrock is poised to generate
approximately $45 million annually from this ETF, indefinitely,” he
stated. This steady revenue stream could be a precursor to more
institutional products and greater acceptance of Bitcoin as a
legitimate asset class. Duncan also discussed the potential
normalization of a 1% Bitcoin allocation in major investment
portfolios, which he believes could drive significant future
inflows. “If 1% becomes the global standard allocation to Bitcoin,
we have a lot of inflows to go,” he noted, suggesting that not
having such an allocation might soon be viewed as a strategic
oversight. He added, “A great selling point from these firms is if
you don’t have 1% in BTC your essentially short / underweight BTC.
This begins to flip the career risk from owning BTC to not owning
BTC, a massive paradigm shift.” Ethereum And The Future Of Altcoins
Turning to Ethereum, Duncan expressed optimism about the upcoming
US spot Ethereum ETF, which he believes could outperform the
Bitcoin ETF in profitability due to higher fees and potential
revenue from staking. “Blackrock’s most successful product launch
ever is likely to have a sequel with the Ethereum ETF, which could
be even more profitable,” he predicted. He criticized the current
low expectations surrounding the Ethereum ETF, which he attributes
to widespread misinformation and underestimation of its potential
impact. “The ETH ETF is likely a higher margin product for
Blackrock, and adding staking could boost its profitability even
further,” Duncan explained, suggesting that the integration of
real-world assets (RWA) on-chain could enhance its appeal. At press
time, BTC traded at $61,764. Featured image created with DALLE,
chart from TradingView.com
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