Cryptocurrency expert Duncan (@FloodCapital) recently expressed his strong belief that Bitcoin has bottomed in the market and is poised to achieve all-time highs. for him analysisshared on X (formerly Twitter), provides a detailed examination of current market dynamics and underlying fundamentals that indicate a potential bullish turn for Bitcoin and other cryptocurrencies.
Has Bitcoin hit bottom?
In his in-depth analysis, Duncan noted that the cryptocurrency market has underperformed compared to stocks over the past few weeks. This trend was a source of concern until a pivotal development emerged regarding Jebel Jukes. “Yesterday’s Mt. Gox headline provided a plausible explanation for recent market behavior,” Duncan noted. Expectations of billions of bitcoins being distributed to creditors were anticipated by insiders, leading to a temporary decline in the market.
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The situation was deeply analyzed by Alex Thorn, Head of Research at Galaxy Digital, who Proposal Selling pressure resulting from this event may be less severe than initially expected. As Duncan explained, “We hit the bottoms of the range, resulting in approximately $300 million in long-term liquidations.” While these numbers are large, 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 indicates a cold market, which is also evidenced by lower altcoin open interest, lower funding rates, and lower upside options skew.
Duncan noted that sentiment on Crypto Twitter is “literally the worst I’ve ever seen,” even though Bitcoin is down less than 20% from its all-time highs. This sentiment is rooted in the traumatic experiences of crypto natives who saw an altcoin boom outpace Bitcoin and Ethereum in 2021, tried to forecast a similar pattern this year but were met with a very different market structure.
Capital flow into Bitcoin has been significantly affected by ETF developments, with BlackRock applying for an ETF in June 2023 when Bitcoin was at $26,000. The approval and subsequent $14.3 billion inflow into the ETF represents a stark contrast to previous years dominated by decentralized finance (DeFi) and rising consumer interest in altcoins. “This year, capital is leaning heavily towards Bitcoin, influenced by its perceived stability and the formal financial product structure of ETFs,” Duncan explained.
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On the fundamental side, Duncan highlighted Blackrock’s strategic moves within the cryptocurrency space. “With $17 billion in IBIT and a fee of 25 basis points, Blackrock is poised to generate approximately $45 million annually from this ETF, indefinitely,” he said. This steady revenue stream could serve as a precursor to more institutional products and greater acceptance of Bitcoin as a legitimate asset class.
Duncan also discussed the potential normalization of Bitcoin’s 1% allocation in major portfolios, which he believes could lead to significant future inflows. “If 1% becomes the global standard allocation for Bitcoin, we have a lot of inflows coming,” he noted, noting that the lack of such an allocation may soon be seen as a strategic oversight. He added: “The great selling point of these companies is that if you don’t have 1% of BTC, your BTC is essentially short/underweight. This starts to flip the professional risk from owning Bitcoin to not owning Bitcoin, which is a massive paradigm shift.” “
Ethereum and the future of altcoins
Turning to Ethereum, Duncan expressed optimism about the US-based Ethereum ETF, which he believes could outperform the Bitcoin ETF in terms of profitability due to higher fees and potential revenue from staking. “Blackrock’s most successful product launch ever will likely have a sequel with an Ethereum ETF, which could be even more profitable,” he predicted.
He criticized the current low expectations surrounding the Ethereum ETF, which he attributes to misinformation and underestimation of its potential impact. “The ETH ETF is likely to be a higher margin product for Blackrock, and adding tokenization could further enhance its profitability,” Duncan explained, noting that the integration of real-world assets (RWA) on the chain could boost its appeal.
At press time, Bitcoin was trading at $61,764.
Featured image created with DALLE, a chart from TradingView.com