Biggest bull run of all time incoming?

The fact that Bitcoin has risen nearly 60 percent since the beginning of the year and has now even reached a new all-time high is no accident. Although the Bitcoin Spot ETF approved by the U.S. Securities and Exchange Commission (SEC) in January is also contributing immensely to the price explosion, it is only one indicator of the current bull run. Other reasons include the current low level of global interest and Bitcoin's decoupling from established assets. But is this just speculation or are these concrete facts?

ETFs and halving lead to supply shock for Bitcoin

Every day an average of 900 BTC are added to the supply. On February 13, we bought BlackRock and the others investment funds about 12,735 BTC in one day. This is equivalent to more than 10 times the amount of Bitcoin mined daily.

The right-hand column shows the daily inflows and outflows of all BTC spot ETFs I Source: BitMEX

From data from BitMEX Research shows that ETF sponsors have withdrawn nearly 55,000 BTC from the market in the past seven days. That's roughly twice as much Bitcoin as is mined in two months.

The price is rising due to explosive demand and low supply. This is evident in the Bitcoin rate: BTC has risen about 30 percent in the past month.

Bitcoin halving so-called block grant I Source: Robin Seyr on X

What is likely to further fuel the supply shock - and therefore price pressure - is the halving. As of April 20, 2024 the amount of Bitcoin added to the market each day will halve - only 450 BTC per day will be added to the system.

If demand from Wall Street remains strong, the price is likely to rise further.

Global interest in Bitcoin is just beginning

Despite the attention Bitcoin is currently receiving from Wall Street, global interest is slowly picking up. In recent weeks, the word "Bitcoin" has been increased worldwide on Google Trends. Volume reached a record high in ETF Week last year - and it has been downhill since then. A comparison with 2021 - the peak of the last bull market - is also interesting.

Search volume was at its highest in May 2021 I Source: Google Trends

Search volume is nowhere near the last level. This becomes even more evident with respect to the number of views of crypto YouTube videos. These are even lower than during the bear market in 2022. So the current price rally seems to be driven mainly by institutional investors, while Bitcoin does not yet seem to be on the radar of retail investors.

So there is still plenty of room for improvement - for the Bitcoin price and the interest of the general public. If BTC rises even higher, some acquaintances of bitcoiners may soon say, "Is now a good time to get in?"

Bitcoin does not correlate with gold and stock indices in the short term

Until now, Bitcoin has responded to interest rate and inflation data in a similar way to established assets. With the latest developments, however, the cryptocurrency has decoupled from this. While gold dropped below $2,000, the S&P 500 and Nasdaq 100 stock indexes fell 1.4 percent and 1.8 percent, respectively.

Moreover, hopes of an upcoming easing of interest rate policy by the US inflation rates. There is currently only one probability of 34 percent that the U.S. Federal Reserve will cut interest rates in early May.

There is a clear positive correlation between the BTC price and the M2 money supply. But if Bitcoin can hold its own against a long-term correlation with other assets, then the largest cryptocurrency is all the more attractive as an alternative store of value for portfolio diversification.

Speculation or fact: will this be the biggest bull run ever?

Bitcoin's supply is limited, that's a fact. The number of coins that will ever be in circulation is 21 million. Note that a significant portion of the 19.6 million BTC currently in circulation is considered lost. Combined with the upcoming halving, this leads to significant supply pressure.

So far, demand from ETF sponsors has increased. However, there is speculation that ETF inflows will continue.

Disclaimer: This article represents the author's opinion only and is for informational purposes only. It is in no way a recommendation to buy or sell.