Why is Bitcoin this Round's Largest Alpha?
2024 is a significant year for the digital crypto market. Bitcoin is one of the most volatile asset classes, having gained over 50% in the past month alone. It remains to be seen whether this trend will continue.
The mechanism behind this market performance is unclear, but it is evident that the price of any asset cannot rise without a contraction in supply and an increase in demand. Let's analyse the supply and demand sides separately.
Supply Side
On the supply side, less than 2 million BTC can be newly generated according to the consensus. The rate of increase will see another halving, which will further reduce the new dumping pressure. Looking at the miners' accounts, they have remained above 1.8 million coins for a long time. Following this trend, miners show no tendency to sell off.
However, the number of BTC held in long-term accounts continues to increase and currently stands at around 14.9 million. Despite its limited market capitalisation of less than 350 billion, the number of highly circulating BTC can also explain why a daily average of 500 million dollars of continuous buying can lead to the rapid growth of BTC.
Demand Side
The rise in demand can be attributed to several factors:
- The liquidity provided by ETF
- The appreciation in the value of assets held by affluent individuals
- The allure of financial business over short-term investment interests
- For funds, BTC is a buy that cannot be missed
- BTC is at the heart of the flow
The Unique Scarcity of the Present Bitcoin Market is the ETF
BTC's approval of the ETF by the SEC has enabled it to access traditional financial markets. Compliant funds can now flow into BTC, and traditional finance can only invest in BTC within the crypto world.
Deflationary BTC is an asset structure that is easy to buy and easy to get caught up in.
ETFs also increase BTC's liquidity. It is important to note that compliant liquidity can only flow to BTC, not to other digital crypto assets.
Richs' Favored Cryptocurrency, Bitcoin, Will Only Increase in Cost
Introducing the Matthew effect: assets held by the wealthy tend to increase in value, while those held by ordinary people tend to decrease. Without government intervention, the market economy will inevitably exhibit the Matthew effect, resulting in the rich becoming richer and the poor becoming poorer. This phenomenon serves as a theoretical foundation.
Crucial Factor : Secure a Portion of the Cryptocurrency's Financial Market
After the SEC approved the BTC spot ETF, it triggered market competition at multiple levels. Without the endorsement of the BTC spot ETF, the issuer not only loses the commission but also loses the right to speak on BTC pricing. The corresponding financial market also loses the pricing power of BTC, and even more so, the market for BTC spot derivatives. This is a strategic failure for any country and financial market.
Forming a collusion of smashing in the global traditional financial capital is difficult, but instead, a Fomo is likely to arise during the process of constantly grabbing chips.
The Project's Bootstrap
BTC's bootstrap involves referencing other projects to increase BTC's traffic, improve BTC's image, and ultimately drive more traffic to their own operations. This reverse injection of traffic benefits BTC.
Currently, the competition among projects is intense. Dozens of Layer2 and tens of millions of BTC transactions are vying for attention, all aiming to increase BTC's adoption. This year, BTC's traffic is expected to be stronger than in the past, as so many projects are mentioning BTC.
Compared to last year, the most significant variable in the market is the adoption of BTC's ETF. Analysis shows that all factors are contributing to the increase in BTC's price. Supply is decreasing while demand is increasing rapidly.
So I believe that BTC will be the biggest alpha in 2024.
