(BTC) performance this year is similar to previous 4-year market cycles and marks the early stages of a potential bull market.
- While great interest in Bitcoin appears in the futures market, Bitcoin perpetual futures are clearly diverging from Ethereum perpetual futures.
- The open interest of Bitcoin CME futures is up by $1 billion, indicating higher activity among US firms.
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Bitcoin’s 2023 Performance Draws Attention
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According to research firm Reflexivity Research, Bitcoin’s performance this year mirrors previous four-year market cycles and signals the early stages of a potential bull market. The firm published a report this week analyzing the factors behind the strong performance in the second quarter and examining both the market structure and on-chain data.
The report focuses on the support Bitcoin has provided for two significant events this year: the banking crisis surrounding Silicon Valley Bank (SVB) in March and BlackRock’s spot Bitcoin ETF application in June.
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The report notes that each event “has seen digital gold outperform other digital assets within the market.” Bitcoin currently represents over 50% of the total market capitalization of the crypto market, and key individuals like Michael Saylor predict it will rise to higher levels as regulatory pressures decrease capital flow to altcoins.
The increased interest in Bitcoin is particularly evident in the futures market, where Bitcoin futures clearly diverge from Ethereum futures.
The growing interest in Bitcoin is predominantly coming from the United States, where BlackRock’s recent application could pave the way for the country’s first official spot Bitcoin ETF. The report highlights that most of Bitcoin’s performance has occurred during U.S. trading hours since the asset manager’s application.
Additionally, the open interest of Bitcoin CME futures has increased by $1 billion among U.S. firms since the application.
Current On-Chain Data for Bitcoin
Regarding on-chain data, researchers highlighted Ordinals as an area to watch in the coming quarters. The total number of Ordinals records is approaching 15 million and has provided miners with an additional $56 million in fees so far.
For the first time this quarter, the number of Bitcoin addresses holding more than 1 BTC surpassed 1 million, and the network processed approximately $2 trillion worth of transactions during this period. Reflecting the findings of other firms like Glassnode and Santiment, Reflexivity stated that Bitcoin’s supply held by long-term investors is currently relatively high, indicating that market participants do not plan to sell their coins in the near future.
The firm noted, “If some of these ETFs get approved, the effects of newly discovered demand where the current supply is near all-time lows could be quite powerful.”
However, the possibility of a downside risk still lingers, and the research firm concluded, “It appears to be early innings for this current bull cycle, and the likelihood of retesting cycle lows akin to March 2020 still remains.