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- Bitcoin’s recovery toward an all-time high is faster than in previous years, driven by institutional players.
- Muted retail investor demand sets the stage for continued upside.
- Approval of a Bitcoin ETF between January 5 and 10 could trigger ‘selling on the news’ if there is insufficient demand for the instrument.
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With the drawdown from the ATH in November 2021 to 36%, the recovery toward the all-time high appears much faster than in prior cycles. This view was reached by K33 Research.
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Since the last ATH, 755 days have passed. The drawdown to -40% in 2021 occurred on day 1092, while in 2017 it was 1178 days later.
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Analysts explained that the difference is driven by demand from financial institutions, conditioned by expectations for the approval of a spot ETF based on digital gold, they added.
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“In none of the previous cycles has institutional demand been comparable with the current one — large institutions are both participating in the space and publicly backing Bitcoin. In 36 days, US ETFs will receive their final verdict,” — according to the report.
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Analysts at QCP Capital warned that the further dynamics will be determined by actual demand for the instrument.
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“Whether we return to the ATH at $69,000 or not depends on actual inflows into the ETF in the first weeks of trading. If they are insufficient, a classic ‘selling on the news’ may occur,” — they explained.
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Earlier, SEC began collecting public comments on spot Bitcoin ETFs. Lawyer Scott Johnson saw in this a signal that the regulator is ready to approve all applications for the instrument by January 10, 2024.
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This view is shared by Bloomberg analyst James Seyffart. The analyst identified a window for potential approval of the product from January 5 to January 10.
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Okay the window for potential spot #Bitcoin ETF approval is looking like its gonna be between Jan 5 & Jan 10 2024. I spoke with @thomasg_grizzle & @ScottW_Grizzle this morning and nailed this call. https://t.co/sOU950QlXj pic.twitter.com/y9JYdEpjNH
— James Seyffart (@JSeyff) November 30, 2023
According to K33 Research, CME data on annual premiums in Bitcoin and Ethereum futures above 17% and record open interest indicate no profit-taking by institutional investors.
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Experts noted a lack of enthusiasm among retail traders. Bitcoin’s 164% year-to-date jump has not led to a meaningful rise in traffic and trading volume on crypto exchanges. Activity is now below levels seen in Q3 2022, they added.
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According to The Block, there is no positive trend in the dynamics of search queries for keywords.
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Observations from K33 Research point to a lack of substantial enthusiasm on offshore crypto-derivative platforms, where funding rates remain barely above zero. Analysts noted that risk appetite “has clearly not reached alarming levels.”
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“The fact that retail investor participation remains subdued suggests that Bitcoin still has substantial upside potential,” — the report notes.
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Glassnode analysts noted that the leading cryptocurrency had entered the acceleration phase of the bull market.
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Earlier Matrixport confirmed a forecast of Bitcoin rising to $63,000 by April 2024.
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Earlier Blockstream CEO Adam Back digital gold to $100,000 in the coming months.