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This year, Bitcoin (BTC) is exhibiting a performance pattern reminiscent of prior 4-year market cycles, indicating the initial stages of another possible bull market, as per the analysis from market research firm Reflexivity Research.
The firm released a report this week that investigates the factors contributing to the asset’s robust performance in Q2, analyzing both market structure and on-chain metrics.
Who Is Purchasing Bitcoin?
According to the report, Bitcoin is currently benefiting from two significant events this year: the banking crisis involving Silicon Valley Bank (SVB) in March and BlackRock’s application for a Bitcoin Spot ETF in June.
Each of these occurrences has “disproportionately favored digital gold compared to other digital assets in the market,” the report noted. Bitcoin now accounts for over 50% of the total cryptocurrency market capitalization, with advocates like Michael Saylor anticipating higher peaks as regulatory actions push capital away from altcoins.
Significant interest in Bitcoin is evident in the futures market, where Bitcoin perpetual futures are “clearly diverging away” from Ether perpetual futures.
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Bitcoin Perpetual Futures VS Ether Perpetual Futures. Source: Glassnode
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Increased interest in Bitcoin appears to be particularly emerging from the United States, where BlackRock’s recent filing could lead to the country’s first official Bitcoin spot ETF. The report highlights that a majority of Bitcoin’s performance has occurred during US trading hours since the asset manager’s submission.
Additionally, Bitcoin CME futures open interest has surged by $1 billion since the filing, further suggesting heightened activity among US firms.
An On-Chain Perspective
In terms of network data, the researchers pointed out Ordinals as a “space to monitor in the upcoming quarters.” The total number of Ordinals inscriptions is approaching 15 million, having generated an extra $56 million in fees for miners thus far.
The count of Bitcoin addresses holding over 1 BTC surpassed 1 million for the first time this quarter, and the network processed approximately $2 trillion in transactions during that period.
Echoing findings from other firms, including Glassnode and Santiment, Reflexivity noted that Bitcoin’s supply held by long-term holders is now relatively elevated, indicating that market participants are not planning to liquidate their coins in the near future.
“If some of these ETFs receive approval, the impact of newfound demand alongside a near record low available supply could be quite significant,” the firm stated.
Nonetheless, a black swan event remains a possibility, “[It] seems to be early innings for this current bull cycle, with the chance of revisiting cycle lows akin to March of 2020 still present,” the report concluded.
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