Expert Predicts Bitcoin Has Hit Bottom and Will Reach New Highs Soon
Crypto analyst Duncan, known as @FloodCapital, has recently shared his optimistic outlook on Bitcoin, suggesting that the cryptocurrency has hit its market bottom and is now on track for new record highs. Duncan’s analysis, originally posted on X (formerly Twitter), delves into the current market dynamics and fundamental factors that point towards a bullish trend not only for Bitcoin but potentially for other digital assets as well.
In his detailed assessment, Duncan highlighted the recent underperformance of the crypto market compared to traditional equities. This trend raised concerns until a significant development concerning Mt. Gox came to light. Duncan pointed out that the news about Mt. Gox provided a plausible explanation for the recent market behavior. The anticipated distribution of billions of Bitcoins to creditors led to a temporary market downturn, although insiders had foreseen this event.
Galaxy Digital’s Head of Research, Alex Thorn, further examined the impact of this selling pressure from the Mt. Gox situation. Despite substantial long liquidations totaling around $300 million, the market experienced a milder reaction compared to previous instances where over $750 million was liquidated within 24-hour periods in March and April. This data suggests a cooling market, supported by reduced altcoin open interest, lower funding rates, and a less bullish options skew.
Duncan highlighted the prevailing negative sentiment on Crypto Twitter, emphasizing that despite Bitcoin being less than 20% off its all-time highs, sentiment among crypto natives is at an all-time low. This sentiment stems from the disappointment of those who expected a repeat of the altcoin boom that outperformed Bitcoin and Ethereum in 2021, only to encounter a different market scenario this year.
The influx of capital into Bitcoin has been significantly influenced by the emergence of ETFs, with Blackrock applying for an ETF when Bitcoin was priced at $26,000. The subsequent approval and inflow of $14.3 billion into the ETF marked a shift away from previous years dominated by decentralized finance (DeFi) and high consumer interest in altcoins. This year, capital inflows have been heavily skewed towards Bitcoin due to its perceived stability and the structured financial product nature of ETFs, as explained by Duncan.
Looking ahead, Duncan discussed the potential normalization of a 1% Bitcoin allocation in major investment portfolios, suggesting that such a shift could lead to substantial future inflows. He noted that not having a 1% Bitcoin allocation might soon be viewed as a strategic oversight, potentially flipping the career risk from owning Bitcoin to not owning it.
Transitioning to Ethereum, Duncan expressed optimism about the forthcoming US spot Ethereum ETF, which he believes could surpass the profitability of the Bitcoin ETF due to higher fees and potential staking revenue. He criticized the current low expectations surrounding the Ethereum ETF, attributing it to misinformation and underestimation of its potential impact. Duncan highlighted the integration of real-world assets on-chain as a factor that could enhance the Ethereum ETF’s appeal.
As of the latest data, Bitcoin was trading at $61,764. The crypto market continues to evolve, driven by various factors such as market sentiment, regulatory developments, and institutional interest, shaping the future trajectory of digital assets.
