(Kitco News) – The cryptocurrency market is officially in consolidation mode as Bitcoin (BTC) now trades below $68,000 following last week’s rally to a new record high above $73,800, while many high-flying altcoins are experiencing double-digit corrections.
Data provided by TradingView shows that Bitcoin hit a low of $64,490 on Sunday, a 12.7% decline from its high, which is actually a mild pullback considering the top crypto’s volatile history after new highs.
BTC/USD Chart by TradingView
Bulls managed to push BTC back above $68,000 in early trading on Monday, but bears are once again attacking their support line and have dropped King Crypto to $67,480 at the time of writing, a decline of 0.80% on the 24-hour chart.
Hallmarks of an early bull cycle
“Despite the volatility and fluctuating prices, the previous week demonstrated continued strong momentum for BTC Spot ETFs, with net inflows recorded on all trading days,” said Matteo Greco, Research Analyst at Fineqia International. “The weekly net inflow surpassed $2.5 billion, with Tuesday alone witnessing a net inflow of over $1 billion. The cumulative net inflow since inception now stands at approximately $12.2 billion.”
“Trading volume for BTC Spot ETFs also witnessed an upward trend, with total trading volume reaching $141.7 billion since inception, including nearly $28 billion traded in the last week,” he added. “This translated to a daily trading volume exceeding $5.5 billion during the previous week, contributing to a higher average daily volume since inception, currently standing at approximately $3.15 billion.”
While Bitcoin has historically shown more volatility in the wake of a new record high, oftentimes experiencing pullbacks of 20-30%, it has shown more resilience this time around, largely thanks to the demand brought by the ETFs, Greco noted.
“These figures underscore the sustained momentum of investments from traditional finance into the digital assets space,” he said. “Despite BTC's price stability last week, the demand primarily stems from ETFs, while native digital assets investors are more active on the selling side.”
“This trend is evident in the decrease of BTC held by long-term holders, referring to BTC that remained unmoved for at least 155 days,” Greco noted. “At the beginning of 2024, this supply was nearly 16.3 million BTC, gradually decreasing to about 15.1 million BTC as of now. This shift reflects traditional investors driving buying activity through ETFs, while native digital assets investors, who accumulated during the downtrend in 2022 and 2023, are now profit-taking at a higher rate, reducing long-term holder supply.”
He said this behavior “is characteristic of early bull phases, where long-term holders distribute assets to new investors. If the current market remains in an uptrend, analyzing the past cycles, this pattern could persist until the supply from long-term holders matches the demand from new investors, which usually coincides with the cycle's peak and the beginning of a downtrend phase.”
Greco noted that the next Bitcoin halving “is approximately one month away,” and said that historically, the cycle has peaked “between 6 and 12 months later. If historical patterns repeat, the current cycle's peak could occur in late 2024 or the first half of 2025.”
Standard Chartered ups its cycle peak estimate
Amid the historical demand and trading volumes for the spot Bitcoin ETFs, Standard Chartered has raised its year-end forecast for Bitcoin to $150,000 from $100,000 and thinks the cycle could see it peak at $250,000.
The firm determined these price targets by comparing Bitcoin’s performance with the price of gold after gold ETFs were introduced in the U.S., and by correlating ETF inflows and the BTC price.
“We think the gold analogy – in terms of both ETF impact and the optimal portfolio mix – remains a good starting point for estimating the ‘correct’ BTC price level medium-term,” Standard Chartered analysts said in an investment note sent to clients on Monday. “If ETF inflows reach our mid-point estimate of $75 billion, and/or if reserve managers buy BTC, we see a good chance of an overshoot to the $250,000 level at some stage in 2025.”
Once the eventual blow-off top arrives, the analysts said they see Bitcoin’s price settling around $200,000.
They also said there is a good chance that the Securities and Exchange Commission (SEC) could approve the first spot Ether ETFs on May 23, which would lead to inflows of as much as $45 billion in the first 12 months, pushing ETH price to $8,000 by the end of 2024.
“In 2025, we see the ETH-to-BTC price ratio rising back to the 7% level that prevailed for much of 2021-22," the analysts said in a separate note. “Given our estimated BTC price level of USD 200,000 at end-2025, that would imply an ETH price of $14,000.”
