by vinogrq
I’ve been trying to understand why do we have a sudden Bitcoin price raise in 2024 and I can’t find any good basis for it.
1) Retail and general crowd doesn’t seem to be interested in Crypto after previous bull run.
While Binance has slightly increased traffic, the amount is incomparable to a previous bull run
2) Exchanges inflow / outflow is declining
In comparison to a previous bull run, when there was clear increase in Exchanges BTC in and out flows.
This cycle I can only see a steady decline in both flows with no correlation to BTC price.
3) BTC On-Chain token transfer flow is all time low
Since previous market crash, the amount of daily transferred tokens is very low and has no correlation with BTC price. Which can be treated as an indication that people don’t transfer BTC anymore
4) BTC ETFs volume had an increase, but the size is incomparable to increased BTC Market Cap
While we do see some institutional interest in BTC, total managed ETF size has increased from $30B to $60B since January, which is incomparable to $400B -> $1.3T BTC Market Cap increase
While we see a steady decline in public interest, we also see a huge increase in BTC Market Cap since the last year. Personally, I can only see 2 reasons why BTC had a big rally this year.
Possible explanation #1 – futures gambling
BTC has lost its utility and became a gambling instrument for short term futures traders. While the amount of transferred tokens is low, we can see a significant increase in Open Interest on BTC Futures market, and BTC price has significant correlation with futures trading volume
Possible explanation #2 – new USDT is printed every day to buy and be backed by BTC
BTC is mostly traded against USDT. While we see a steady increase of USDT Market Cap over this year, we don’t see same increase in USDT daily transferred amount.
We also see a decline in USDC Market Cap since previous bull run
Additionally to that, we can see that Bitfinex (a sister company to USDT) exchange has a very large pool of BTC in the exchange, which is incomparable to their daily traded volume
Conclusion
While we see a steady decline in crypto interest in retail market, but we also see a new ATH and a very large Market Capitalization.
One possible explanation could be a switch from Spot to Futures market, where average crypto investor can gamble away their capital utilizing the power of margin.
Another possible explanation is USDT to USD 1:1 rate is a myth, new USDT is being printed to both buy and elevate BTC price to eventually use new investors attracted by high returns as exit liquidity, increasing negative outlook of crypto in general.
Very curious what do you guys think about it?
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.