Where Are We In This Bitcoin Cycle? Galaxy Lead Researcher Answers
29 February 2024 - 8:00PM
NEWSBTC
In a comprehensive analysis shared via X (formerly Twitter), Alex
Thorn, the Head of Firmwide Research at Galaxy, delved into the
intricacies of the current Bitcoin market cycle, answering the
question “Where Are We In This Bitcoin Cycle?” As Bitcoin trades
robustly around $62,000, with a notable spike to $64.000 yesterday,
the crypto landscape is witnessing unprecedented dynamics, marked
by a surge in ETF inflows, strategic acquisitions by corporate
entities, and a palpable shift in investor sentiment towards
digital assets. Thorn emphasized how different this cycle is:
Effectively, the bull runs of 2017 and 2020 hadn’t yet begun at
this stage in Bitcoin’s supply schedule. 52 days before 2nd Halving
(9-JUL-16) BTCUSD $455.22 (-59.86% from ATH) 52 days before 3rd
Halving (11-MAY-20) BTCUSD $6,174 (-68.56% from ATH) 52 days before
4th Halving (20-APR-24) BTCUSD $59,330 (-12.16% from ATH) Why This
Bitcoin Cycle Is Different Central to his analysis is the
record-breaking influx of capital into spot Bitcoin ETFs, with
Thorn highlighting, “The BTC ETFs took in a whopping net $576m of
BTC yesterday (Tuesday Feb. 27), with BlackRock alone seeing $520m
of inflows, its largest ever day.” This significant movement of
funds not only underscores the growing institutional interest in
Bitcoin but also marks a pivotal moment in the cryptocurrency’s
journey towards mainstream financial recognition. Related Reading:
Analyst Labels Bitcoin Rally Strongest Pre-Bull Cycle Yet A key
aspect of Thorn’s analysis is the unwavering strength of Bitcoin’s
long-term holder base, which he estimates to hold about 75% of the
total BTC supply. “Long-term holders are still mostly holding
strong,” Thorn notes, emphasizing the community’s resilience and
faith in Bitcoin’s long-term value proposition. This demographic,
characterized by their ‘diamond hands’, plays a crucial role in
stabilizing the market and buffering against the volatility that
often defines the crypto space. Thorn further elaborates on the
analytical tools and metrics that provide insight into Bitcoin’s
market behavior. He introduces the MVRV Z-Score, a novel approach
to understanding the cyclicality of Bitcoin’s price action by
comparing its market value to its realized value. This metric
offers a window into the perceived overvaluation or undervaluation
of Bitcoin at any given point. Currently, the MVRV Z-Score is close
to 2, while previous cycle tops saw the metric spike to 8 (in 2021)
or even above 12 (in prior halving cycles). Addressing the
speculation around the acceleration of the Bitcoin cycle, Thorn
firmly dispels concerns that the market is prematurely peaking. He
argues against the notion that we are “speedrunning the ‘cycle'”,
instead asserting that the advent of Bitcoin ETFs in the United
States represents a transformative shift with far-reaching
implications. “This time is different,” Thorn asserts, pointing to
the ETFs’ disruption of traditional Bitcoin price cycles and their
impact on investor behavior and intra-crypto dynamics. The Spot
Bitcoin ETF Effect Thorn underscored the transformative impact of
Bitcoin ETFs, positing that we are merely at the beginning of a
significant shift in how Bitcoin is accessed and invested in,
particularly by the institutional sector. “Despite incredible
volumes and flows, there’s plenty of reason to believe that the
Bitcoin ETF story is still just getting started,” he stated,
pointing to the untapped potential within the wealth management
sector. In their October 2023 report titled “Sizing the Market for
the Bitcoin ETF,” Galaxy laid out a compelling case for the future
growth of Bitcoin ETFs. The report highlights that wealth managers
and financial advisors represent the primary net new accessible
market for these vehicles, offering a previously unavailable avenue
for allocating client capital to BTC exposure. The magnitude of
this untapped market is substantial. According to Galaxy’s
research, there is approximately $40 trillion of assets under
management (AUM) across banks and broker/dealers that has yet to
activate access to spot BTC ETFs. This includes $27.1 trillion
managed by broker-dealers, $11.9 trillion by banks, and $9.3
trillion by registered investment advisors, cumulating to a total
US Wealth Management AUM of $48.3 trillion as of October 2023. This
data underscores the vast potential for Bitcoin ETFs to penetrate
deeper into the financial ecosystem, catalyzing a new wave of
investment flows into Bitcoin. Related Reading: Expert Predicts
Bitcoin At $750,000 As Fidelity Advises 1-3% Allocation Thorn
further speculated on the upcoming April round of post-ETF-launch
13F filings, suggesting that these filings might reveal significant
Bitcoin allocations by some of the largest names in the investment
world. “In April, we will also get the first round of
post-ETF-launch 13F filings, and (I’m just guessing here…) we are
likely to see some huge names have allocated to Bitcoin,” Thorn
anticipated. This development, he argues, could create a feedback
loop where new platforms and investments drive higher prices, which
in turn attracts more investment. The implications of this feedback
loop are profound. As more wealth management platforms begin to
offer access to Bitcoin ETFs, the influx of new capital could
significantly impact BTC’s price dynamics, liquidity, and overall
market structure. This transition represents a key moment in the
maturation of Bitcoin as an asset class, moving from a speculative
investment to a staple in diversified portfolios managed by
financial advisors and wealth managers. We Are Still Early Thorn’s
optimism extends beyond the immediate market indicators to the
broader implications of Bitcoin’s integration into the financial
mainstream. He anticipates a new all-time high for Bitcoin in the
near term, fueled by a combination of factors including the ETFs’
momentum, increasing acceptance of BTC as a legitimate asset class,
and the anticipatory buzz surrounding the upcoming halving event.
“All this is to say, my answer to that burning question – where are
we in the cycle? – is that we haven’t even begun to reach the
heights this is likely to go,” he concludes. Thorn’s analysis
culminates in a bullish forecast for Bitcoin. As the community
stands on the cusp of the fourth BTC halving, Thorn’s insights
offer a compelling vision of a market poised for unprecedented
growth, driven by a confluence of technological innovation,
regulatory evolution, and shifting global economic currents.
“Bitcoin is prime time now, and while it might be hard to believe,
things are just starting to get exciting,” Thorn declares,
capturing the essence of a market at the threshold of a new era. At
press time, BTC traded at $62,065. Featured image created with
DALL·E, chart from TradingView.com
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