Bitcoin
Here’s Why Bitcoin Bottom Is In, New Highs Imminent: Expert
Cryptocurrency expert Duncan (@FloodCapital) recently expressed a strong belief that Bitcoin has bottomed and is poised for new all-time highs. analysisshared on X (formerly Twitter), provides a detailed analysis of current market dynamics and underlying fundamentals that signal a bullish turn for Bitcoin and potentially other cryptocurrencies.
Is Bitcoin bottoming?
In his in-depth analysis, Duncan highlighted that the crypto market has been underperforming relative to stocks in recent weeks. This trend was a concern until a crucial development emerged regarding Mount Gox. Duncan noted: “Yesterday’s Mt. Gox headline provided a reasonable explanation for recent market behavior.” The expectation of billions of Bitcoin being distributed to creditors was anticipated by insiders, leading to a temporary market crash.
The situation was analyzed in depth by Alex Thorn, Head of Research at Galaxy Digital, who suggested that the selling pressure from this event may be less severe than initially feared. As Duncan explained: “We swept the lows of the range, leading to about $300 million in long liquidations.” While these numbers are significant, they are modest compared to the liquidation events in March and April, where more than $750 million was liquidated in three different 24-hour periods. This suggests a cooling market, which is also evidenced by reduced open interest on altcoins, lower funding rates, and a less bullish tilt on options.
Duncan noted that sentiment on Crypto Twitter is “literally the worst I’ve ever seen” 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 surpass Bitcoin and Ethereum in 2021, tried to anticipate a similar pattern this year but were faced with a drastically different market structure.
Capital inflow into Bitcoin was significantly influenced by ETF developments, with Black stone filing for an ETF in June 2023, when Bitcoin was priced at $26,000. The approval and subsequent $14.3 billion inflow into the ETF marked a stark contrast to previous years dominated by decentralized finance (DeFi) and high consumer interest in altcoins. “This year, capital is heavily skewed toward Bitcoin, influenced by its perceived stability and the formal financial product structure of ETFs,” Duncan elaborated.
On the fundamental side, Duncan highlighted Blackrock’s strategic moves within the crypto space. “With $17 billion in IBIT and a 25 basis point commission, Blackrock is poised to generate approximately $45 million annually from this ETF, indefinitely,” he stated. This steady stream of revenue 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 across major investment portfolios, which he believes could generate significant future flows. “If 1% becomes the global default allocation for Bitcoin, we will have a lot of flows ahead of us,” he noted, suggesting that not having such an allocation could soon be seen as a strategic oversight. He added: “A big selling point of these companies is that if you don’t have 1% in BTC, your BTC is essentially short/underweighted. This starts to shift the career risk from owning BTC to not owning BTC, a huge 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 surpass the Bitcoin ETF in profitability due to higher fees and potential staking income. “Blackrock’s most successful product launch will likely 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 further increase its profitability,” Duncan explained, suggesting that the integration of real world assets (RWA) on-chain can increase its appeal.
At the time of writing, BTC is trading at $61,764.
Featured image created with DALLE, chart from TradingView.com