Is the Bitcoin Bull Market Really Coming as Coin Prices Rush to $35K?
[TL；DR]:
The lateral progress news of spot ETFs is an important driving force behind the recent surge in Bitcoin.
Amidst the excitement of the bull market, MEME, GameFi, AI, and other sectors, as well as some veteran oversold project tokens, have surged, highlighting the urgent rebound sentiment suppressed by the bear market.
The inflow of funds from ETFs, the narrative of the fourth halving, and the expectation of next year’s Fed rate cut all indicate that the Bitcoin market will usher in a more positive value discovery process.
Introduction
With the news fermenting that the authenticity of spot Bitcoin ETFs has been difficult to distinguish, the recent Bitcoin price has quickly surged to the highest level of $35,000 after reaching a slight correction of $30,000, setting a new high since the beginning of this year. Subsequently, Altcoin has also skyrocketed in turn, which has forced many investors to ask: Has a bull market really arrived?
So is Bitcoin’s current surge a strong rebound in the bear market or a return to the bull market trend? This article will take everyone to reflect on the current market situation and unravel the reasons behind the surge.
Side News of Spot ETFs Helps Bitcoin Soar Up
The sharp rise in Bitcoin prices is closely related to the recent positive news related to spot Bitcoin ETFs in the United States.
In late October, the US District Court upheld the lawsuit between Grayscale and the SEC, indicating that there were almost no legal review obstacles in the process of converting GBTC (Bitcoin Trust Fund) into an ETF, while BlackRock’s spot Bitcoin ETF also made substantial progress.
On October 24th, the Washington D.C. Circuit Court of Appeals ruled on the dispute between the SEC and Grayscale, requiring the SEC to face up to the Grayscale application.
Therefore, Grayscale not only applies to convert GBTC into spot Bitcoin ETFs, but also applies to the SEC to convert ETHE (Ethereum Trust Fund) into spot Ethereum ETFs.
Soon, the SEC’s official website showed that it had accepted the filing information for the changes in the listing and trading rules of Grayscale Ethereum.
At the same time, news spread that BlackRock’s spot Bitcoin ETF had obtained a CUSIP number and began selling “Seed” funds. After BlackRock’s spot Bitcoin ETF with the code IBTC appeared on the website of DTCC, a major financial market tool provider in the United States, the entire market finally became excited and quickly rose to $35,000 a few hours later. This is a return to bullish confidence levels since falling below $35,000 in May last year.
Figure 1: Bitcoin Price Trends Source: Gate.io
As is well known, spot Bitcoin ETFs will provide a regulated mainstream investment tool for US investors, allowing them to invest in Bitcoin without directly owning cryptocurrency. This is an important step in the mainstream adoption of Bitcoin, and observers and investors are also anticipating the entry of a large amount of over-the-counter funds, which may help drive the value of Bitcoin to a higher level.
For example, Matricport pointed out in a recently released report that Bitcoin is currently in its fifth bull market cycle, and the expectations adopted by institutions may be the main driving force of the fifth bull market. In addition, institutions are considering Bitcoin as a way of asset allocation diversification, because Bitcoin has similar characteristics to other safe haven investments such as gold and treasury bonds.
According to a recent study by Galaxy, it is estimated that in the first year after the launch of ETFs, the inflow of Bitcoin ETFs may reach $14 billion, followed by an increase of $27 billion and $39 billion, respectively. Over a long period of time, the potential increase in incremental funds for Bitcoin investment products is approximately $125 billion to $450 billion.
The Frenzy of the Altcoin Season
Unlike previous times, when Bitcoin has risen alone, this time Altcoins have followed suit, and even seen a surge in various sectors, sparking people’s “bull market memories.” A very significant emotional observation indicator, the Greed and Panic Index, reached 72 on October 25th, which is equivalent to the peak of Bitcoin at $69,000 two years ago.
Market Fear and Greed Index Figure 2 Source: alternative.me
Amidst the excitement of the bull market, MEME, GameFi, AI, and other sectors, as well as some veteran oversold project tokens, have surged, highlighting the urgent rebound sentiment suppressed by the bear market.
In the MEME sector, old and emerging tycoons such as PEPE, DOGE, and SHIBA have surged. Floki has launched the asset tokenization platform TokenFi, and its token TOKEN has created a hundredfold myth. The NFT project Memeland has performed even more eye-catching, taking advantage of this opportunity to issue Memecoin, with a pre-sale amount of 8737131 ETHs (approximately $15.667 million).
The GameFi sector continues the hot trend of BigTime, with AXS, APE, and SLP represented by Axis Infinity rising sharply. At the same time, MC, GALA, GMT, and other sectors are also experiencing a common situation.
The AI sector was favored by funds due to the first artificial intelligence conference on November 6th, with AGIX, FET, OCEAN, FREE, and other sectors leading the way in growth.
Of course, not all sectors are roaring. Against the backdrop of the delayed Cancun upgrade, the performance of some L2 project tokens and some unpopular tracks such as sports, privacy, and social media is relatively mediocre.
Future Prospects
Overall, BlackRock’s spot ETFs have received pre-IPO preparations. Although the news has been repeated several times, it has finally led to a breakthrough in the market power that has been accumulating power for 200 days, and a series of short positions have also contributed to the outbreak of the market.
From the trajectory of the past few bull markets, various Altcoins have rebounded significantly with the rise of Bitcoin, indicating that market sentiment has shifted from bearish to bullish. However, in the peripheral situation where the Federal Reserve maintains high-interest rates, the crypto market still needs new technology and product innovation to enhance the persistence of market bullish sentiment, which is still worth looking forward to.
In fact, this round of rise is more like an emotional release after being suppressed for a long time under the stimulation of positive news.
However, this venting is not baseless, taking the market value of stablecoins, which is the most important measure of market health, as an example. In the past week, the market value of USDT, as the main trading force, has increased by over $630 million, and crypto asset investment products have been net inflows for four consecutive weeks. The recent inflows are related to the favorable progress of spot Bitcoin ETFs applied for by institutions such as BlackRock. The inflows so far this month have now approached $500 million.
However, it seems too early to talk about a comprehensive bull market. Compared to the previous round of bull markets, the current on-chain activity is still relatively quiet, and the market value of stablecoin supply has been in a slight contraction trend. Therefore, under the premise of not improving liquidity, various narratives are competing for limited capital, which has led to a rapid and weak sustainability of sector rotation.
stablecoin supply still hasn’t rebounded Figure 3 Source: DefilLama
Since the beginning of this year, the long-dormant Bitcoin eco has gradually become prosperous. The NFT and BRC-20 protocols with inions have successfully sparked a wave of FOMO hype, and the emergence of protocols such as BitVM and Taprot Assets has also sparked a development boom for Bitcoin Layer2. From a macro perspective, against the backdrop of global liquidity not yet relaxed and regional tensions, Bitcoin has made significant progress in reviewing spot ETFs, which has led to its relatively strong side and demonstrated its cornerstone role as a leader in the crypto market.
In summary, future inflows of funds from ETFs, the narrative of the fourth halving, and expectations for the Federal Reserve’s interest rate cut next year indicate that the Bitcoin market will usher in a more positive value discovery process.
