As long-term holders continue to deplete the supply of Bitcoin, US investors are eagerly diving into the cryptocurrency.
Market analysis firm Reflexivity Research suggests that Bitcoin’s performance this year is mirroring previous four-year market cycles, indicating the initial stages of a potential bull market. In a recent report, the firm delves into the factors driving the asset’s robust performance in Q2, analyzing both market structure and on-chain data.
Who is Buying Bitcoin?
According to the report, Bitcoin has experienced significant momentum due to two key events in 2023: the banking crisis involving Silicon Valley Bank (SVB) in March, and BlackRock’s application for a Bitcoin Spot ETF in June.
The report points out that these events have had a greater positive impact on Bitcoin compared to other digital assets in the market. As a result, Bitcoin now accounts for over 50% of the total market capitalization of cryptocurrencies, with experts like Michael Saylor expecting even higher prices as regulatory crackdowns divert capital away from alternative coins.
The increased interest in Bitcoin is evident in the futures market, where Bitcoin perpetual futures have significantly outperformed Ether perpetual futures.
The rise in interest is particularly pronounced in the United States, where BlackRock’s recent filing could lead to the country’s first officially sanctioned Bitcoin spot ETF. The report highlights that the majority of Bitcoin’s price movement has occurred during US trading hours following the asset manager’s submission.
Furthermore, there has been a $1 billion increase in open interest for Bitcoin CME futures since the ETF filing, indicating increased activity among US firms.
A Look on Chain
In terms of network data, the researchers emphasized the significance of Ordinals as an area to monitor in the coming quarters. The total number of Ordinals inscriptions has now reached nearly 15 million, generating an additional $56 million in fees for miners thus far.
This quarter marked a milestone as the number of Bitcoin addresses holding over 1 BTC surpassed 1 million for the first time ever. Additionally, the network processed approximately $2 trillion in transactions during this period.
In line with findings from other firms such as Glassnode and Santiment, Reflexivity noted that the supply of Bitcoin held by long-term holders is currently relatively high. This suggests that market participants have no immediate plans to sell their coins.
The firm also highlighted the potential significant impact of approved ETFs on Bitcoin’s demand, especially given the near-record low availability of supply. The effects of this newfound demand could be substantial.
However, the report concluded that there is still the possibility of a black swan event, and it appears to be early stages of the current bull cycle. There is still a chance of retesting cycle lows similar to those experienced in March 2020.