Joe Caseline, Institutional Marketing Lead at BIT, shares why the upcoming Bitcoin halving could differ from previous cycles.
Breaking past the $55K mark was already a significant event, but before the champagne was
sufficiently chilled, we zoomed past $60K like it was nothing. Is this out of the ordinary?
Looking back to the 2021 cycle, the market was also going at full speed, hitting new highs in this
trading zone topping out at $64K the first time, and $69K the second time. But there is a minor
difference between then and now, which changes the context quite a bit.
The last time we were in this price range, it marked the end of the bull run yet today we’re not
even past halftime yet – marked by the BTC halving expected in April 2024.
Most analysts would agree that the halving doesn’t mark the top but rather adds fuel to the fire
in a classic supply and demand shock. As a reminder, during the previous halving in May 2020,
BTC was still trading 50% below the all-time high.
This time, we could very well break past the all-time high before the Bitcoin halving. That would
be a first in Bitcoin history.
In fact, in over 30 countries representing 60% of the world’s population and 30% of GDP, that is
already the case. Whales, shrimps, and krill are all trading in new price ranges across China,
Japan, South Africa, Turkey, Argentina, Nigeria, and many more.
The ‘flight to quality’ is in full play as these currencies weaken against the dollar, and this will
only intensify globally as the dollar, in turn, weakens against Bitcoin.
As a side note, adjusted for inflation, the $69K mark set in 2021 is actually $78K in today’s
dollar. Central Banksters keep moving the goalpost, but we can move faster.
So what does that mean? Is this going to be a steeper but shorter cycle? Do we correct 50% so
that models based on past performance stay relevant? Is there something wrong with the left
phalange?
Truth is, there is no phalange. The map is not the territory, and our models are not reality.
We’re not speedrunning the cycle, cos there’s a few things that exist today which did not exist
during all previous cycles. And it has an effect on behavior, timing, and broader market
dynamics.
O Retail Where Art Thou?
Declaring whether retail is here or not usually hinges on a combination of anecdotal evidence
and indirect data.
Like everyone else on Crypto Twitter, I too have not yet heard from civilians whether they should
buy Bitcoin or Solana. There is no wave of new subs opening up their YouTube cos they gotta
see this new dude. Celebrities act like they don’t know. Apps aren’t trending. Nobody’s Googled
Bitcoin.
These are all old indicators that worked in the bling-bling era of 2017 and 2021, but seem a lot
less relevant today.
Retail got hurt during the last cycle. They bought at the high end. Their Lunar coinage vanished
into thin air. Platforms went down. And when the right-click JPEGs fell through the floor, some
people went from flipping NFTs back to flipping burgers.
They weren’t eager to jump back in at $40K cos that was probably their starting point during the
previous cycle. 50K might have induced a little more FOMO, and 60K will surely scratch a few
more itchy trigger fingers.
Yet none of that would lead to Googling Bitcoin. They still have their trading app, so there’s no
need for anything to trend. And with the SEC going after celebrities for their endorsements…do
we really expect more fortune to favor the brave, Matt?
Of course, we can’t overlook the most obvious reason why these indicators are less relevant
today. There is a much easier way for retail to buy into the Bitcoin narrative.
Don’t Fade The ETFs
Turns out, there’s quite a few people, funds, and companies that would like to get exposure to
Bitcoin but can’t be bothered to KYC on an exchange let alone set up their own wallet.
I know fundamentalist don’t like the exchange-traded bitty funds for techno-philosophical
reasons. It certainly wasn’t what ‘Satashi‘ had in mind, but that doesn’t change anything.
Since trading began in January, Bitcoin ETFs have pulled in over $6.7 billion and we’re just
getting warmed up. Net inflows to the Newborn 9 appear to be accelerating while net outflows of
GBTC are finally approaching zero. This is unprecedented territory for ETFs catering to
traditional investors. BlackRock’s IBIT alone pulled in $520 million of fresh funds on a single
day.
Apparently, Fidelity is advising their clients a porto allo between 1% and 3%, while orange-pilled
BlockRock is serving up a hearty 28%. Morgan Stanley is allegedly deciding whether to offer
spot bitcoin ETFs to customers of its large brokerage platform.
That last one signals the next chapter in the ETF story.
Billions have already poured into these products, but the real Wall of Money from major
registered investment advisor (RIA) networks and broker-dealers platforms like Merrill Lynch
and Morgan Stanley is yet to come. Currently, there’s still $40 trillion of AUM within banks and
broker/dealers that has no way of flowing into Bitcoin.
The Unseasoned Bull Market
In addition to a new wave of more money coming in faster, persuaded by the Massive Marketing
Machines of the world’s largest financial institutions, the ETFs will likely change the market
dynamics compared to what we’ve seen before.
Funds invested in Bitcoin using ETFs will likely be a lot stickier. This is not money that rotates
into altcoins, into meme coins, into JPEGs. It is incredibly unlikely Mrs. Boomer faxes her
advisor to ‘sell everything, I’m setting up my own wallet to buy this dog bone’ when Bitty’s up on
a ledge.
Worse yet, now that 9 out 10 dentists agree that an ETH ETF approval has the same odds as a
coin toss, altcoin appetite could be satisfied by the silver Number 2 coin via said fund.
That doesn’t mean none of the altcoins will flourish. Many major caps have already caught up
with or even surpassed Bitcoin’s gains.
New narratives across modular blockchains, RWAs, DePIN, liquid staking tokens, and the
BRC20 scribes each have their own promising plots and heroes. Especially new Airdrop players
that aren’t schlepping price baggage from the previous cycle are in a good place for meltup
moments.
But a true altcoin season, where the market is led by altcoins and Bitcoin sort of follows the
direction in the background, that seems less and less likely this time around.
The current cycle has a new flavor. Things happen sooner, faster, and rotate counter-clockwise.
If you only go by existing models of what should happen next, you’d think something is off.
But Bitcoin could very well break its all-time high before the halving for the first time. There is no
phalange.
Joe Caselin is the Institutional Marketing Lead at BIT, a comprehensive cryptocurrency exchange designed for professional use, featuring advanced risk management and fund efficiency supported by Portfolio Margin and Unified Margin. BIT was launched in August 2020 as an affiliate of Matrixport, a crypto financial services company.
