Cryptocurrency expert Duncan (@FloodCapital) recently expressed his strong belief that bitcoin has reached its lowest point in the market and is poised to hit new all-time highs. His x.com/FloodCapital/status/1805676651818500149″ target=”_blank” rel=”nofollow”>analysisshared on x (formerly twitter), provides a detailed examination of current market dynamics and underlying fundamentals that signal a bullish turn for bitcoin and potentially other cryptocurrencies.
Is bitcoin at the bottom?
In his in-depth analysis, Duncan noted that the cryptocurrency market has been underperforming stocks in recent weeks. This trend was a cause for concern until a pivotal event emerged regarding Mt. Gox. Duncan noted, “Yesterday’s Mt. Gox headline provided a reasonable explanation for recent market behavior.” Experts had anticipated the expectation that billions worth of bitcoin would be distributed to creditors, which caused the market to temporarily crash.
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The situation was analyzed in depth by Alex Thorn, head of research at Galaxy Digital, who bitcoin-sell-pressure-mt-gox/” target=”_blank” rel=”nofollow”>He suggested that the selling pressure derived from this event could be less severe than initially feared. As Duncan explained: “We have broken through the lows of the range, which has led to around $300 million in long liquidations.” While these numbers are significant, they are modest compared to the March and April liquidation events, where more than $750 million was liquidated in three different 24-hour periods. This suggests a cooling of the market, which is also evidenced by lower altcoin open interest, lower funding rates, and a less bullish options bias.
Duncan noted that sentiment on crypto twitter is “literally the worst I’ve ever seen,” despite bitcoin being less than 20% away from its all-time highs. This sentiment is rooted in the traumatic experiences of crypto natives who, having witnessed the rise of altcoins outperforming bitcoin and ethereum in 2021, tried to anticipate a similar pattern this year but were met with a drastically different market structure.
The influx of capital into bitcoin has been significantly influenced by the evolution of ETFs, with Blackrock filing for an ETF in June 2023, when bitcoin was priced at $26,000. The approval and subsequent inflow of $14.3 billion into the ETF marked a stark contrast to previous years dominated by decentralized finance (DeFi) and high consumer interest in altcoins. “This year, capital is heavily biased toward bitcoin, influenced by its perceived stability and the formal financial product structure of ETFs,” Duncan explained.
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Looking at the fundamentals, Duncan highlighted Blackrock's strategic moves within the crypto space. “With $17 billion in IBIT and a 25 basis point fee, Blackrock is able to generate approximately $45 million annually from this ETF, indefinitely,” he said. This steady income stream could be a precursor to more institutional products and greater acceptance of bitcoin as a legitimate asset class.
Duncan also discussed the possible normalization of a 1% bitcoin allocation across major investment portfolios, which he believes could lead to significant future inflows. “If 1% becomes the global standard allocation for bitcoin, we will be left with a lot of inflows,” he noted, suggesting that not having such an allocation could soon be seen as a strategic oversight. He added: “A big selling point of these companies is that if you don't have 1% in btc, your btc is essentially short or underweight. “This begins to shift the career risk from owning btc to not owning btc, a massive paradigm shift.”
ethereum and the future of altcoins
As for ethereum, Duncan expressed optimism about the upcoming US ethereum spot ETF, which he believes could surpass the bitcoin ETF in profitability due to higher fees and potential staking revenue. “Blackrock's most successful product launch is likely to have a sequel with the ethereum ETF, which could be even more profitable,” he predicted.
He criticized the current low expectations surrounding the ethereum ETF, which he attributes to widespread misinformation and underestimation of its potential impact. “The eth ETF is likely a higher margin product for Blackrock, and adding staking could further increase its profitability,” Duncan explained, suggesting that integrating real-world assets (RWA) on-chain could improve its appeal.
At the time of publication, btc was trading at $61,764.
Featured image created with DALLE, TradingView.com chart
