Bitcoin (BTC) has entered a new stage of development, and what are the opportunities and prospects for 2024?

Spot ETFs once again ignite market sentiment, and the BTC ecosystem is worth paying attention toTo learn more about the relevant knowledge and cutting-edge information of the coin circle, please feel free to consult me at LSTT0193. We have the most professional community that publishes daily market analysis and recommends high-quality potential currenciesThe expectation of spot ETFs once again led BTC to rise from the bottom range of $25000 and hit a new high this year

Spot ETFs once again ignite market sentiment, and the BTC ecosystem is worth paying attention to

To learn more about the relevant knowledge and cutting-edge information of the coin circle, please feel free to consult me at LSTT0193. We have the most professional community that publishes daily market analysis and recommends high-quality potential currencies

The expectation of spot ETFs once again led BTC to rise from the bottom range of $25000 and hit a new high this year. On October 16th, Cointelgraph reported false news about the SEC's approval of spot ETFs. BTC briefly moved up to around $30000, but the market did not completely retreat as a result. Instead, it consolidated around MA120 and continued to rise. Obviously, we are in a stage of "rising sentiment", and the sentiment of the market being long has been ignited.

It is worth noting that the BTC ecosystem has made significant progress this year, with the emergence of multiple native protocols such as Ordinals, Atomicals, and PIPE. The innovation of the BTC ecosystem not only brings more possibilities to Bitcoin, but also contains unique investment opportunities, and the performance of related tokens even outperforms BTC.

Ordinals Protocol

Ordinals Protocol$ORDI

2023 1 21 Casey Rodarmor Ordinals 1024Ordinals Protocolv0.10.0BTC$ORDI117$ORDI$ORDI100%

Ordinals Protocol3800$ORDI4CoinbaseUpbit$ORDIBRC-20Indexer$ORDI

Ordinals Protocol3800

SATS launched multiple exchanges with a market value of nearly $300 million

SATS was deployed on March 9, 2023, with a total of 2100 trillion units, corresponding to the number of Bitcoin smartphones. Due to a single casting limit of only 100 million pieces, it was not until September 24th, six months later, that all $SATS castings were completed. Among all BRC-20 tokens, $SATS holds the highest number of addresses on the chain, approaching 40000. Therefore, $SATS has the most supporters and the widest influence.

SATS Basic Information

In the past month, $SATS has risen nearly tenfold and has successively entered exchanges such as Bitgate, Kucoin, and Gate, with a market value of nearly $300 million. Various exchanges are fully embracing the Bitcoin ecosystem, bringing more funds and attention.

$SATS has risen nearly tenfold in the past month

Has the bull market started yet?

When investors talk about a bull market in the stock market, the usual definition is that when the market rises 20% relative to its recent low, it has entered a bull market.

According to this definition, the bull market of Bitcoin was confirmed as early as the second week of January.

Of course, cryptocurrency prices, including Bitcoin, are more volatile than stock market indices such as the S&P 500.

However, considering that Bitcoin has increased by over 140% compared to its 2022 low of around $15000, it is difficult to refute the view that Bitcoin is not in a new bull market.

Firstly, Bitcoin almost perfectly follows the pace of its traditional market cycle, where it experienced a year of intense pullbacks (such as 2014, 2018, and 2022) and then began a three-year bull market, reaching a new historical peak.

It seems that Bitcoin has entered the first year of a new three-year bull market cycle.

Compared to this analysis of typical market cycles for Bitcoin, Trading. biz analyst Cory Mitchell wrote in a memo shared with cryptomedia members earlier this week that Bitcoin may enter what he calls the "acceleration phase" by mid 2024.

Mitchell explained that the "real significant increase" in Bitcoin typically occurs one and a half years after the price bottoms out, indicating that Bitcoin may experience an upward trend around mid 2024 after bottoming out in November 2022.

In 2013, Bitcoin rose by 1200% in approximately 100 days... In 2017, it rose by 1900% in almost a year... By the end of 2020, it had risen by 400% in approximately 140 days.

He pointed out that "once activated, the upward trend of Bitcoin tends to be rapid, usually rising by hundreds of percentage points in less than a year", and predicted that Bitcoin may reach a historical high of approximately $69000 by mid-2012.

With the launch of $30000 on the Bitcoin platform, it has essentially entered a new stage. In a sense, the direct driving factor of this round of market is a false news about the passing of Bitcoin ETFs, but with the continuous emergence of positive news, Bitcoin is constantly breaking new highs in hesitation. However, from the data on the chain, it can be seen that retail investors are constantly pouring in, while large funds are showing some signs of leaving. How should we view the deep logic behind the current rise of Bitcoin? How will Bitcoin develop in the future?

Bitcoin enters a new stage

In a previous article, we pointed out that "the reason why Bitcoin is worth 30000 US dollars is because it is likely to be the boundary between bull and bear; before effectively breaking through, it enters the early bull stage, and if it cannot effectively break through, it still remains at the bear tail." From the current trend of Bitcoin, it undoubtedly has entered the early bull stage. Below, we will introduce this new stage from different dimensions.

From the perspective of halving the cycle of Bitcoin, it is indeed entering a new stage. According to the S2F model of PlanB, Bitcoin has entered the "6 months before halving -18 months after halving" period, during which buying and holding yields are good.

In addition to the approaching halving of Bitcoin, there has been an important turning point in the path of regulatory compliance for cryptocurrency assets, and the launch of Bitcoin ETFs seems imminent. Faced with potential huge market dividends, investment sentiment in the cryptocurrency market is soaring. In the Ripple case, on October 3rd, Judge Torres rejected the SEC's appeal request; On October 19th, the SEC withdrew all charges against RippleCEOBradGarlinghouse and co founder Chris Larsen, and cancelled the trial scheduled for next year. In August 2023, court documents showed that a three judge appeals panel in Washington overturned the SEC's decision to block grayscale ETFs. On October 19th, Gray announced on the X platform that the S-3 form had been submitted as part of the effort to convert GBTC into ETF On November 9th, according to insiders, the US Securities and Exchange Commission (SEC) has opened a dialogue with Grayscale regarding the details of its application to convert trust product GBTC into ETF.

From a macro cyclical perspective, there are also signs of a shift in the Federal Reserve's economic policy, and interest rate hikes may come to an end. On November 1st local time in the United States, the Federal Reserve announced its latest interest rate resolution, announcing that the benchmark interest rate would remain unchanged (between 5.25% and 5.5%). This is also the second consecutive suspension of interest rate hikes by the Federal Reserve after the September meeting. In a statement released on the same day, the Federal Reserve stated that recent indicators indicate a strong expansion of economic activity in the United States in the third quarter, with job growth slowing down since earlier this year but still strong, and inflation rates still at high levels. When determining the extent of further tightening policies, the Federal Reserve will consider the cumulative degree of monetary policy tightening, the degree of lag in the impact of monetary policy on economic activity and inflation, and economic and financial development. The Federal Reserve will continue to reduce its holdings of US treasury bond bonds, institutional debt and institutional mortgage-backed securities, and is firmly committed to restoring the inflation rate to 2%.

There is a high possibility that the Federal Reserve will no longer raise interest rates at its December meeting. However, if inflation significantly exceeds expectations in the near future, especially if core inflation and inflation expectations significantly rebound, the possibility of the Federal Reserve raising interest rates again may increase. CICC pointed out that if the overall financial conditions reflected by the current US bond interest rates remain in balance with the economic situation, the Federal Reserve may continue to suspend interest rate hikes in December. However, if one party breaks this balance, such as a significant decline in US bonds or economic data exceeding expectations, interest rate hikes may still be on the table.

Bitcoin still needs testing support

There are indeed many positive factors in the current round of Bitcoin's rise, but overall, the level of capital speculation is still very high, and Bitcoin may still need to be supported by a downward test.

The direct stimulus effect of this round of Bitcoin's rise is mainly caused by a fake news about the passing of Bitcoin ETFs. Subsequently, with the continuous positive release of Bitcoin ETFs, market sentiment continued to mobilize, and funds began to flow in. This part of the funds is mainly focused on retail investors, which reflects the FoMo sentiment in the market.

From the data on the chain, small-scale investors (with holdings of less than 10 BTCs) are not only in a state of increasing holdings, but also in the strongest trend of increasing holdings, especially investors with holdings of less than 1 BTC have the largest increase in the chain; Except for super whales with holdings greater than 100000 BTCs, giant whales are generally in a state of underweight, and the degree of underweight is still significant.

According to a report by BiTui, Glassnode data shows that on November 2nd, Bitcoin experienced its fourth major inflow, with a capital scale of $300 million. As soon as the funds flowed in, Bitcoin began to decline. In a sense, there are indeed signs of large funds cashing out and leaving the market, but based on the proportion of long-term holders, they are still at a high level.

The current rise of Bitcoin is mainly influenced by spot ETFs. However, as a risky asset, Bitcoin is still facing many challenges in the global economy, making it difficult to directly exit the bull market. The most important thing is that the Federal Reserve is essentially still in a rate hike cycle. The Federal Reserve has always emphasized the need to control US inflation at 2%, and there is still a distance from this target. Although the market has seen some positive signals, premature optimism may not be appropriate. According to a report by Bitui, Federal Reserve Governor Bowman stated that we expect to still need to further increase the federal funds rate.

Prospects for crypto market in 2024

Although we believe that Bitcoin may still provide short-term support, this testing will become insignificant in the face of the huge opportunities in 2024. From various signs, the halving of Bitcoin ETFs and Bitcoin will undoubtedly become the main driving force for the next bull market of Bitcoin. The US wealth management industry may be the most accessible and direct market, and a new wealth creation effect is about to begin.

Galaxy estimates that the potential market size for the US spot Bitcoin ETF in the first year after its launch is approximately $14 trillion. It believes that due to accessibility reasons, the US wealth management industry may be the most accessible and direct market, and has obtained the most net new accessibility from approved Bitcoin ETFs. As of October 2023, the total assets managed by brokerage dealers ($27 trillion), banks ($11 trillion), and RIAs ($9 trillion) amounted to $48.3 trillion.

With the opening of channels for access, the entry cycle of Bitcoin ETFs across these sub markets may continue for several years. We assume that the RIA channel will grow from 50% in the first year and increase to 100% in the third year. For brokerage and banking channels, we assume a slower growth rate, starting from 25% in the first year and steadily increasing to 75% in the third year. Based on these assumptions, we estimate the potential market size of the US spot Bitcoin ETF to be approximately $14 trillion in the first year, $26 trillion in the second year, and $39 trillion in the third year.