Although Bitcoin (BTC) remains the undisputed leader in the digital asset market, it is still awaiting mass retail adoption.
Despite notable growth in institutional investment and the strength of its market dominance, current metrics suggest retail flow remains moderateleaving a window of opportunity and expectation for an upcoming bullish rally, signals a Capriole Investments report.
In terms of market dominance, bitcoin has consolidated its position, increasing its share from 40% to 60% of the total Cryptocurrency market capitalization.
However, despite this institutional strengthening, retail activity remains reserved.
The number of active addresses in bitcoin – those that carry out transactions – remains at levels similar to the lows of 2016, 2018 and 2019, well below the peaks reached during the bull markets of 2017 and 2020-2021, as can be seen in the following graph.
Number of addresses that carry out transactions are at the same level as the minimums of 2016, 2018 and 2019. Source: Capriole Investments.
Additionally, internal exchange volumes, that is, the movement of BTC between wallets on exchanges, has not recovered from the crisis of confidence after the FTX exchange bankruptcy in 2022, explains Capriole.
Current volumes are still below those of 2020 and 2021, as seen in the following graph.
Internal exchange volumes. Source: Capriole Investments.
Additionally, in the graph below you can see the sum of the inflows and outflows of the exchanges over the last 6 months. This has been equal to or less than zero since 2022.
Sum of the inflows and outflows of the exchanges. Source: Capriole Investments.
The company says:
The extent of this phenomenon has never been seen before in the history of Bitcoin. This suggests a continued lack of trust in exchanges (and/or in the benefits of trading on centralized exchanges) since what happened with FTX.
Capriole Investments, investment firm.
Meanwhile, leveraged speculation has also declined: futures trading volumes, including perpetual contracts, are much lower than in 2021.
The chart below shows that perpetual contracts lost their lead in 2023, and that options have assumed the dominant position in the market today.
Open interest in Bitcoin derivatives markets. Source: Capriole Investments.
This is indicative of the “institutionalization” of bitcoin and a “move away from the historical leadership of perpetual contracts in a market driven primarily by retail trading before 2022,” the firm notes.
Additionally, Altcoin market capitalization remains 40% below 2021 highs, further highlighting the widespread preference for bitcoin.
Bitcoin transactions on the rise
In contrast, Bitcoin network transactions are booming this year, but this growth is mainly due to factors such as sign-ups and the introduction of RUNES.
On-chain transactions in Bitcoin are booming in 2024. Source: Capriole Investments.
RUNES, or in Spanish “Runas”, is a token standard in Bitcoin that facilitates the creation and transaction of fungible tokens on this network. That is, it allows developers and users to generate stablecoins, memecoins or other exchangeable assets representative of decentralized finance (DeFi).
Without these elements, chain activity would be in decline, showing that much of the current dynamism comes from this new use, says Capriole.
On the other hand, interest in bitcoin spot ETFs has grown significantly. In less than a year, the holdings of these funds have reached one million of BTC, representing 5% of the total bitcoin supply, indicating a clear preference by retail and institutional investors to acquire and hold bitcoin instead of other assets.
Bitcoin, a safe asset
The analyst Juan Rodríguez highlighted in February 2024 that retailers have not yet fully entered the bitcoin market.
In his opinion, Higher retail participation could mark a “second bull wind”raising the price of bitcoin to new highs.
Regarding vision for the price of bitcoin, the company Made Easy Finance also anticipates a significant rise: they estimate that bitcoin could exceed $100,000with the potential to double to $200,000, as reported by CriptoNoticias.
According to the firm, This positive trend could extend until April 2025although for October of that year they anticipate the beginning of downward pressure that could close this “key window of appreciation” in the price.
Currently, the bullish rally that has led bitcoin to reach a price of between $72,000 and $73,000 is seen as “very healthy” by Capriole. However, in the last few hours its price has fallen to $70,000, as seen in the following graph. TradingView.
BTC price. Source: TradingView.
Capriole Investments highlights that, despite this appreciation, the levels of speculation and leverage remain moderate compared to previous cycles, such as those of 2016-17 and 2020-21.
With bitcoin holding strong without the extensive use of leverage, the framework for the end of 2024 and 2025 looks positivehighlights Capriole. Furthermore, growing institutional adoption, both through ETFs and futures and options on traditional platforms, reinforces this sustainable growth outlook.
Elections in the United States: a key variable
Historically, bitcoin highs have been a precursor to a surge in speculative activity. This phenomenon could be repeated in the next cycle, opening a more speculative environment with more robust retail participation and an increase in the value of altcoins.
The presidential elections in the United States, scheduled for November 5, could be the catalyst for this next bullish phasesays investment firm.
Former president and current candidate Donald Trump has positioned himself as a defender of the digital asset industry, focusing much of his campaign on promote a favorable environment for the growth of bitcoin and other digital assets in the country.
Trump has promised to make the United States fertile ground for this industry, promoting initiatives such as Bitcoin Mining and encouraging investment in cryptocurrencies.
Trump, who left the US presidency in 2021, has been pro-bitcoin now that he intends to return to the White House as ruler. Source: YouTube/Donald Trump.
A Trump victory could result in an additional boost to the bitcoin market and an acceleration of its retail adoptionas it would offer a favorable regulatory environment for the growth of the industry.
Thus, although the retail world has not yet embraced bitcoin en masse, current economic and political factors seem to pave the way for broader participation.
Crypto Keynote USA
For the Latest Crypto News, Follow ©KeynoteUSA on Twitter Or Google News.
