Organizations Plan to Acquire Bitcoin by the End of 2023: Discussion with CryptoQuant

Bitcoin has seen an increase year-to-date, banks are failing, and the Federal Reserve appears to be nearing the conclusion of its monetary tightening efforts. Does this indicate the return of the bull market?

CryptoPotato engaged with the crypto market analytics company CryptoQuant at Consensus 2023 to explore various aspects of Bitcoin’s pricing, including its position within the market cycle, its relationship with gold, and its significance amid the current US banking crisis.

Positive Outlook for Bitcoin

When inquired about the potential return of the bull market, CryptoQuant’s Head of BD & Strategy Benjamin Brannan informed CryptoPotato that Bitcoin seems to be “emerging from the depths of the bear market.”

While he personally considers corrections to be “always a possibility,” the business development leader mentioned that he has heard from institutional clients planning to invest in Bitcoin and crypto during Q3 and Q4 of 2023.

“These insights come from discussions I’ve had primarily with institutional allocators and individuals involved in fundraising for core funds,” Brannan stated during the interview. “They’ve been in talks with various institutions or high net worth individuals.”

Brannan further noted that institutions are anticipating the latter part of the year for confirmation that Bitcoin has moved beyond the bear market, which currently seems “to be the case.”

ADVERTISEMENT

Bitcoin’s Relationship with Gold

Starting the year at approximately $16,500, Bitcoin has swiftly risen to over $27,000 in reaction to this year’s US banking crisis, which has led to the downfall of institutions such as Silicon Valley Bank, Silvergate, First Republic, and others.

This situation has coincided with a decreasing correlation between Bitcoin and stocks, alongside an increasing correlation with gold. This trend is particularly evident in Bitcoin’s newfound strength against Federal Reserve interest rate hikes, which adversely affected both stocks and crypto last year.

Brannan remarked that the “rush to Bitcoin” indicates that the market is, at least temporarily, perceiving the digital currency as a “safe haven asset.” He anticipates that in the long run, it will function similarly to a blend of stocks and gold.

Meanwhile, CryptoQuant’s Head of Marketing, Ho Chan Chung, suggested that Bitcoin is regarded as a commodity that performs well when the fiat system is underperforming. Unlike other cryptocurrencies, US regulators have reached a consensus that Bitcoin is a commodity, while altcoins may be classified as securities.

The Four-Year Market Cycle

Bitcoin is well-known for its cyclical movements between bull and bear markets every four years, influenced by its supply issuance schedule that reduces its inflation rate within these intervals. Although the overall pattern is predictable, accurately timing the peaks and troughs of the crypto market can be challenging.

Brannan indicated that there are reliable indicators to pinpoint bottoms from an on-chain perspective. One such indicator is the Market-Value to Realized-Value ratio (MVRV), which calculates an asset’s market capitalization relative to its realized capitalization (which values all Bitcoin based on the price at which each coin was last moved, and presumably sold).

“When coins are being held at a very high unrealized loss, then I think it’s a good time to buy,” Brannan stated. “If many participants are holding their coins at unrealized gains, particularly high unrealized gains, it suggests that a lot of individuals may be looking to sell and realize some profits.”

Ho Chan Chung (Centre); Brannan (Right).

Variations of MVRV, such as Spent Output Profit Ratio (SOPR) and net unrealized profit and loss (NUPL), can also assist in identifying market peaks and troughs, especially when they exceed key threshold ratios.

CryptoQuant monitors MVRV ratios based on different age bands corresponding to when coin movements occurred – including one day, one week, one month, and so forth.

Price Forecasts

When questioned about near-term price forecasts, both Brannan and Chung concurred that Bitcoin is unlikely to revisit its $16,000 lows.

“Unless there are unforeseen events such as a nuclear incident involving Russia and Ukraine, or a collapse of Binance… we should remain relatively stable regarding the low lows,” Chung stated.

Chung further mentioned that Bitcoin might even exceed its previous all-time high by Q2 2024 – coinciding with the next Bitcoin halving event.

In the long term, Brannan expressed that Bitcoin could realistically attain $1 million by 2030. He believes that even the tightening regulatory landscape in the United States could ultimately benefit the asset.

“I think Bitcoin is more challenging to regulate compared to ‘crypto.’ I believe it can benefit,” he remarked.

SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.