Bitcoin’s dominance within the cryptocurrency market has reached a three-year high, signaling strong demand for US spot Bitcoin ETF holding the largest digital asset and a challenging period for smaller tokens.

Bitcoin accounted for nearly 55% of the $2.4 trillion digital asset market at the end of last week, a level not seen since April 2021. On Saturday, in particular, BTC’s dominance jumped to 57% as it briefly touched the $67,000 mark. 

The next largest tokens by market share include Ethereum (ETH), Tether’s USDT stablecoin, Binance exchange’s native token Binance Coin (BNB), and Solana (SOL).

BTC’s Rise Fueled By Successful US Bitcoin ETF Launches

According to Bloomberg, the recent success of the recently approved US spot Bitcoin ETFs from prominent issuers such as BlackRock and Fidelity Investments has played a significant role in Bitcoin’s rise. 

These ETFs have garnered approximately $56 billion in assets, making their debut one of the most successful in fund category history.

The inflows into these ETFs drove BTC to its current all-time high (ATH) of $73,798 in mid-March, a clear resistance level for the largest cryptocurrency on the market, as evidenced by its inability to consolidate above the $70,000 level following this achievement. 

Although BTC is down about 6% since then, smaller digital assets such as Avalanche (AVAX), Polkadot (DOT), and Chainlink (LINK) have seen more significant declines of nearly 30% over the past month. 

This drop coincided with reduced expectations for looser US monetary policy settings, often fueling speculative gains.

Hong Kong-Listed ETFs Boosts Bitcoin And Ethereum

Institutional investors’ allocations to the US Bitcoin ETF have greatly influenced Bitcoin’s performance relative to the rest of the market. Benjamin Celermajer, director of digital-asset investment at Magnet Capital, noted that strong institutional demand is a key driver.

On Monday, Bitcoin and Ethereum, the second-largest cryptocurrency, saw notable price jumps following indications that asset managers are preparing to launch Hong Kong-listed ETFs on both tokens. Bitcoin rose 4.3% to $66,575, while ETH jumped 6.2% to $3,260. 

These rallies had a positive impact on the broader crypto market, lifting other notable tokens such as Polygon (MATIC), Cardano (ADA), the dog-themed meme coin Dogecoin (DOGE), and Solana, which is now the top 5 cryptocurrency market winner, up over 8% on Monday.

Interestingly, the Bloomberg Galaxy Crypto Index, which measures the performance of the largest digital assets traded in US dollars, has more than tripled since the beginning of last year, marking a significant rebound from the bear market experienced in 2022.

Lastly, investors and traders eagerly anticipate the upcoming Bitcoin Halving, an event that will cut the new supply of the token in half, expected around April 20th. 

Previous Halving events have acted as a tailwind for prices, although there are growing doubts about whether history will repeat itself given BTC’s recent all-time high achievement. 

BTC has successfully maintained its position above the $66,000 threshold and has consolidated in this range. However, it is important to note that losses have accumulated over longer time frames. 

Over the past fourteen and thirty days of trading, the cryptocurrency has experienced significant declines of over 21% and 24% respectively.

Featured image from Shutterstock, chart from TradingView.com

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

The demand for spot Bitcoin exchange-traded funds (ETFs) has surged since their recent approval on January 10, with BlackRock’s IBIT Bitcoin ETF leading the way. This ETF has reached impressive milestones in less than two months, attracting significant investor interest and opening doors for various market participants to invest in the largest cryptocurrency directly. 

As institutional and retail investors flock to these new investment vehicles, market experts predict a bullish trend and anticipate a potential price surge.

Bitcoin ETF Frenzy

According to Bloomberg ETF expert Eric Balchunas, BlackRock’s IBIT Bitcoin ETF has quickly joined the esteemed “$10 billion club,” reaching the milestone faster than any other ETF, including Grayscale’s Bitcoin Trust (GBTC), noting that only 152 ETFs out of 3,400 have crossed the threshold.

Balchunas notes that IBIT’s ascent to this club was primarily driven by significant inflows, which accounted for 78% of its assets under management (AUM). This reflects the growing appetite for Bitcoin exposure among investors seeking diversified and regulated investment options.

In particular, the current trajectory of the ETF market paints a picture of resilience and bullish sentiment in the market. Equity ETF flows, and leveraged trading levels are positive indicators, although they have not yet reached the euphoria seen in 2021, Balchunas notes. 

However, Bloomberg’s new BI ETF Greed/Fear Indicator, which incorporates various inputs, highlights the optimistic outlook shared by ETF investors, as seen in the chart below.

On this matter, crypto analyst “On-Chain College” went to social media X (formerly Twitter) to emphasize the significant demand for Bitcoin as evidenced by its rapid departure from exchanges. 

In its analysis, On-Chain College highlights that Bitcoin ETFs buy approximately ten times the daily amount of BTC mined. At the same time, the upcoming halving event will further reduce the mining supply. The analyst predicts when demand will exceed available supply, leading to potential upward price pressure.

Highest Monthly Close Since 2021

Bitcoin’s recent market performance has caught the attention of wealth manager Caleb Franzen, who highlights the significance of the highest monthly close since October 2021. 

Franzen further emphasizes the bullish momentum by pointing out that the 36-month Williams%R Oscillator has closed above the overbought level for only the fourth time in history. Historical data reveals impressive returns following such signals, indicating the potential for substantial gains in the coming months. 

Additionally, Franzen notes the changing dynamics of the market, with increased institutional participation and the ease of retail onboarding through ETFs.

Franzen presents a compelling case for the bullish nature of overbought signals, urging market participants to view them as momentum indicators rather than signals to fade. Previous instances of overbought signals have resulted in significant Bitcoin price appreciation:

• February 2013: +3,900% in 9 months
• December 2016: +1,900% in 12 months
• November 2020: +260% in 12 months

While acknowledging diminishing returns in each cycle, Franzen highlights the unprecedented level of institutional participation and the ease of retail access through ETFs. 

Even if Bitcoin were to match the +260% gain from the November 2020 signal, it would reach a price of $180,000, surpassing Franzen’s minimum cycle target of $175,000. 

Ultimately, Franzen notes that bull markets are typically characterized by a rising ETHBTC ratio and a falling BTC.D (Bitcoin dominance). While these characteristics have yet to manifest fully, Franzen suggests that a multi-quarter rally in the broader cryptocurrency market may be on the horizon.

Featured image from Shutterstock, chart from TradingView.com 

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

In recent years, the debate surrounding Bitcoin’s (BTC) potential market share relative to gold has garnered significant attention, as recently approved Bitcoin Exchange-Traded Funds (ETFs) can bring Bitcoin significantly closer to gold in key metrics.

Jurrien Timmer, Director of Global Macro at Fidelity Investments, has put forward an analysis that sheds light on this subject. By examining the value of “monetary gold” and Bitcoin’s market capitalization, as well as considering the impact of halvings on Bitcoin’s supply, Timmer presents insights into the future dynamics of these two assets. 

Gold Vs Bitcoin

Timmer’s analysis begins by estimating the share of gold held by central banks and private investors for monetary purposes, excluding jewelry and industrial usage. While this estimation is not exact, based on data from the World Gold Council, Timmer suggests that monetary gold accounts for approximately 40% of the total above-ground gold.

Drawing upon his previous calculations, Timmer posits that Bitcoin has the potential to capture around a quarter of the monetary gold market, with monetary gold valued at around $6 trillion and Bitcoin’s market capitalization at $1 trillion.

Timmer further delves into the impact of Bitcoin halvings on its price. Historically, halvings have had a substantial effect on Bitcoin’s value. However, Timmer raises the hypothesis that diminishing returns may occur in the future as the incremental supply of new Bitcoin decreases.

By comparing the outstanding supply and incremental supply of Bitcoin with those of gold, Timmer demonstrates that the diminishing impact of the halvings is likely to be more pronounced in the future. 

As the number of coins available for mining dwindles, the influence of each subsequent halving event on Bitcoin’s price may diminish. This insight prompts Timmer to explore alternative ways to project Bitcoin’s price trajectory.

BTC’s Price Projections

To account for the diminishing impact of halvings, Timmer introduces the concept of a modified Stock To Flow (S2F) curve. This curve is derived by overlaying an asymptotic supply curve, representing the percentage of coins mined relative to the final supply cap, onto the original S2F curve.

Timmer proposes using a regression formula incorporating PlanB’s original S2F curve and the asymptotic supply curve as independent variables. This modified S2F curve aligns more closely with the supply dynamics of gold, reflecting a scenario in which Bitcoin’s scarcity advantage continues, but its impact on price gradually diminishes over time.

Using the modified S2F model and considering the supply characteristics of gold, Timmer generates hypothetical price projections for Bitcoin that place the cryptocurrency at approximately $100,000 by the end of 2024.

According to Timmer, if Bitcoin were to capture a quarter of the monetary gold market, it would represent a remarkable shift in the global distribution of wealth, which would gradually drive up the cryptocurrency’s price over the coming years.

Featured image from Shutterstock, chart from TradingView.com

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.