Bitcoin bull run has just begun

The surge has just begun

Recently, Matrixport released a new report stating that the halving event is never the peak of the cycle, and the Bitcoin rebound may have just begun.

It stated in the report: “Although the halving is coming (April 19/20, 2024), the halving is never the top of the cycle. On the contrary, the halving means that the mining reward is halved, and the Bitcoin bull market has just passed the halfway point. It is true that the leverage ratio is high now, and the positions and funding rates have grown excessively, but in the short term, the rally may also continue.

We are in the midst of a Bitcoin bull run and the key now is to stay exposed (long positions) until this rally finally follows the parabolic path and collapses under its weight.

Crypto bull markets often see overbought conditions last longer than traders expect, and when prices are due to pull back, overbought signals tend to attract more buyers, and instead of mean reversion, prices will rise parabolically.

According to the model of Tether's impact on Bitcoin prices, an estimated $10-20 billion of ETF inflows could have a huge impact on Bitcoin prices. It is estimated that for every additional $5 billion in inflows, Bitcoin prices will rise by 15%.

Furthermore, the shift in asset allocations between Bitcoin spot ETFs and gold ETFs may still be in its early stages.”

Recently, Matrixport analyst Markus said in an exclusive interview with BlockBeats that Bitcoin may reach $125,000 this year, and the bull market may continue from February to September next year.

He added: "One indicator we saw last July was that when Bitcoin hit a new high for the first time in a year, there would be a 300% rebound, so this data can also be used to deduce $125,000. Last year we made a very accurate judgment, this year we may be more conservative, Bitcoin may reach $125,000 by the end of this year or next year."

Not only that, Markus also believes that this bull market may last from February to September next year, and the current bull market is only halfway through.

Earlier on February 24, Matrixport released a new report stating that BTC's goal of reaching $63,000 in March 2024 has now been achieved.

Bitcoin Halving

Not only Matrixport is bullish on the market outlook, according to CoinDesk, some traders said that optimism, institutional buying demand and historical gains associated with the Bitcoin halving event are pushing the asset to break through its all-time high of $69,000 in March.

The next halving is expected in mid-April, and as long as demand remains constant or increases, the amount of new bitcoins on the open market will decrease and prices will tend to rise.

Historical price action may not repeat itself in the future, but expectations of a rebound could prompt investors to place huge bets on the asset.

“Such anticipation always leads to increased buying activity, with investors anticipating that reduced supply will push prices higher, while a pre-halving rally will help fuel a new bull run, bringing renewed bullish sentiment,” said Bryan Legend, CEO of Hectic Labs.

In addition, Bitget Research stated that with 54 days left until the Bitcoin halving, coupled with the expectation of a mid-year rate cut by the Federal Reserve, the Bitcoin price has support at $50,000 and may fluctuate to a record high in March.

ETF funds continue to flow in

In addition, many analysts believe that ETFs have a potentially huge impact on Bitcoin.

According to an analysis report from asset management firm Grayscale, fundamental changes in the balance of Bitcoin supply and demand could have a greater impact on the cryptocurrency’s price, especially the upcoming halving event.

Historically, halving events are usually followed by a cycle of rising prices. However, a new factor (i.e. ETFs) will also affect Bitcoin’s performance during this year’s halving event in April. The report states: “In addition to the overall positive on-chain fundamentals, Bitcoin’s market structure is favorable for prices after the halving.”

Grayscale reported that the current issuance of new coins per block (mining rewards) is 6.25 bitcoins, which is about $14 billion per year at a price of $43,000. In other words, in order to maintain the current price, $14 billion worth of buying pressure needs to be generated during the same period. "After the halving, these demands will be reduced by half: the issuance of new coins per block will be 3.125 bitcoins, equivalent to a reduction to $7 billion per year, effectively reducing the selling pressure."

After the halving, the mining reward for each block will be reduced to 3.125 bitcoins. In order to cope with cost pressure, miners will usually sell more bitcoin stocks, thereby increasing supply and depressing prices.

Grayscale said that the nine Bitcoin spot ETF products recently launched by Wall Street may "act as a hedge against miner selling pressure." The report stated: "Bitcoin ETFs may absorb selling pressure significantly, potentially reshaping Bitcoin's market structure by providing a stable source of new demand, which is beneficial to prices."

On February 21, Bloomberg analyst Eric Balchunas posted on the X platform that today's trading volume of VanEck Bitcoin Spot ETF (HODL) surged to US$258 million, a 14-fold increase from its average daily trading volume.

He noted that unlike the usual surge in trading volume driven by a single large investor, this time the surge was driven by 32,000 individual trades, 60 times the average.

The Bitcoin spot ETF BTCW had a daily trading volume of $154 million, 12 times its average trading volume, and a trading volume of 25 times its total asset value. The transaction involved 23,000 individual transactions, in stark contrast to only 221 transactions on February 17.

“ I think there will be a bigger wave of bitcoin ETFs in a few months as we start to see major large brokerage firms start to move,” Matt Hougan, chief investment officer at Bitwise, explained in an interview with CNBC.

So we’re going to see the next wave of institutional capital coming in.” He added that the first wave of interest in a Bitcoin ETF came primarily from retail, hedge funds and independent financial advisors. He called the ETF Bitcoin’s “IPO moment.”

Final Thoughts

It can be said that the halving event is an important catalyst for the Bitcoin bull market . Historically, there has been a cycle of price increases after each halving. The next halving is expected to come in mid-April 2024, when the supply of Bitcoin will be reduced by half, which is conducive to price increases.

On the other hand, the inflow of ETF funds is a new factor in the Bitcoin market , which may significantly absorb the selling pressure of miners, provide a stable source of new demand, and reshape the market structure of Bitcoin.