Crypto expert Duncan (@FloodCapital) recently expressed a robust conviction that Bitcoin has reached its market bottom and is poised for brand spanking new all-time highs. His evaluation, shared on X (formerly Twitter), provides an in depth examination of the present 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 evaluation, Duncan identified that the crypto market has been underperforming relative to equities over the past few weeks. This trend was a priority until a pivotal development emerged concerning Mt. Gox. Duncan noted, “Yesterday’s Mt. Gox headline provided an inexpensive explanation for the recent market behavior.” The expectation of billions of Bitcoin being distributed to creditors had been anticipated by insiders, resulting in a brief market dip.
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The situation was analyzed in depth by Alex Thorn, Galaxy Digital’s Head of Research, who suggested that the selling pressure from this event may be less severe than initially feared. As Duncan explained, “We’ve swept the range lows, resulting in about $300M in long liquidations.” While these figures are significant, they’re modest in comparison with the liquidation events in March and April, where greater than $750M was liquidated in three different 24-hour periods. This implies a cooling market, which can also be 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 lower than 20% off its all-time highs. This sentiment is rooted within the traumatic experiences of crypto natives who, having witnessed the altcoin boom outperforming Bitcoin and Ethereum in 2021, tried to anticipate an identical pattern this yr 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 yr, the capital is heavily skewed towards Bitcoin, influenced by its perceived stability and the formal financial product structure of ETFs,” Duncan elaborated.
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On the basic side, Duncan highlighted Blackrock’s strategic movements inside the crypto space. “With $17 billion in IBIT and at a 25bps fee, Blackrock is poised to generate roughly $45 million annually from this ETF, indefinitely,” he stated. This regular revenue stream could possibly 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 worldwide standard allocation to Bitcoin, we’ve got quite 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, “An awesome selling point from these firms is for those who don’t have 1% in BTC your essentially short / underweight BTC. This begins to flip the profession risk from owning BTC to not owning BTC, a large paradigm shift.”
Ethereum And The Future Of Altcoins
Turning to Ethereum, Duncan expressed optimism concerning the upcoming US spot Ethereum ETF, which he believes could outperform the Bitcoin ETF in profitability because of higher fees and potential revenue from staking. “Blackrock’s most successful product launch ever is prone to have a sequel with the Ethereum ETF, which could possibly be much more profitable,” he predicted.
He criticized the present low expectations surrounding the Ethereum ETF, which he attributes to widespread misinformation and underestimation of its potential impact. “The ETH ETF is probably going the next margin product for Blackrock, and adding staking could boost its profitability even further,” Duncan explained, suggesting that the combination of real-world assets (RWA) on-chain could enhance its appeal.
At press time, BTC traded at $61,764.
BTC price, 1-day chart | Source: BTCUSD on TradingView.com
Featured image created with DALLE, chart from TradingView.com