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Indications of persisting Bitcoin bull run beyond $70,000

Bitcoin continues its impressive rally, defying expectations by surpassing the $70,000 mark for the first time. Bitcoin reached it’s all time high of $70,009.00 on March 10, 2024. This milestone has many wondering: is this just a temporary spike, or is the bull run here to stay?

According to Glassnode, an on-chain analytics firm, this February marked the largest monthly dollar increase in Bitcoin’s history, adding a staggering $390 billion to its market capitalization. Sean Farrell, head of digital strategy at Fundstrat Global Advisors, believes “there’s significant potential for this upward trend to continue,” citing strong underlying factors driving the current bull run. Let’s delve into seven key indicators that hint at a potential extension of the bull run.

This short-term rally certainly has room to grow.

Sean Farrell, head of digital strategy at Fundstrat Global Advisors

Beyond Easy Money: A Shift in Drivers

One interesting aspect of this surge is the timing. Unlike previous bull runs fueled by historically low interest rates, Bitcoin’s new all-time high coincides with a period of relatively high rates set by the Federal Reserve. “The recent price increase coincides with stubbornly high interest rates,” observes James Butterfill, head of research at digital asset management firm CoinShares.

This suggests that the current demand for Bitcoin isn’t primarily driven by excess liquidity seeking investment opportunities. Instead, it appears to be fueled by growing institutional interest and broader market acceptance.

A 2023 report by Fidelity Digital Assets found that 70% of institutional investors are already invested in or considering investing in digital assets like Bitcoin. This increased institutional involvement is further corroborated by the launch of several Bitcoin spot ETFs in the first quarter of 2024. These ETFs hold a significant portion of the total Bitcoin supply, effectively taking them out of circulation and reducing overall market volatility.

In the future, if the Federal Reserve decides to lower interest rates, Bitcoin may become a valuable asset for investors looking to protect themselves against inflation, which could lead to a surge in demand for the cryptocurrency. This could result in an increase in Bitcoin’s value as more people seek to invest in this digital currency as a safeguard against inflation.

Increased Institutional Involvement

Another bullish sign is the decline in weekend trading activity as a percentage of total weekly volume. This trend suggests growing participation from institutional investors, who are typically active during regular business hours. The drop from 17% to 13% in weekend trading volume signifies a substantial impact from the launch of Bitcoin spot ETFs.

Moreover, Bitcoin’s exchange holdings have dipped to their lowest point in six years. According to CryptoCompare, exchange holdings currently sit at around 2.8 million Bitcoins, which represents a significant decrease from the peak of over 4.5 million in 2018.

This indicates a strong conviction and long-term investment approach among Bitcoin holders. In 2023 alone, institutional investors purchased over $4 billion worth of Bitcoin through Grayscale’s Bitcoin Trust. In the early months of 2024, numerous Bitcoin ETFs were introduced, resulting in a substantial amount of the total Bitcoin supply being inaccessible.

Looking Ahead: A Promising Future

These factors, combined with potential regulatory support and increasing mainstream adoption, could contribute to further price increases for Bitcoin. Major corporations like Tesla and MicroStrategy continue to hold significant Bitcoin positions, signaling their confidence in the long-term potential of the cryptocurrency. Additionally, regulatory clarity from government bodies around the world could further bolster investor confidence and attract new participants to the market.

While some short-term volatility is always expected, the overall trend suggests the bull run might very well extend beyond the $70,000 mark. However, it’s important to remember that cryptocurrency markets are still relatively young and inherently volatile.