Bitcoin Crypto Future
Bitcoin Crypto Future
Summary of Bitcoin Crypto Future and Price Determinants
Whenever the Crypto Market pumps or dumps, everyone asks the question "why?" The short answer is almost always because BTC is pumping or dumping. Where BTC goes, the rest of crypto follows. This begs the question of what causes BTC to pump or dump. A recent report from one of the best crypto research firms has all the answers that can help you predict the next big Market move. That's why today, we're going to summarize this report and tell you how you can use its findings to get an edge in the crypto Market. If you hold crypto, this is a blog you cannot afford to miss.
The Report: What Determines BTC’s Price?
The report we'll be summarizing today is titled "The Forces Moving Bitcoin." It was published by a crypto research firm, K33, and we'll leave a link to the report in the description. Please note that to access the report, you need a pro account, and Coin Bureau club members get a 50% discount.
The report begins with a brief introduction where the authors explain that the purpose of this report is to present a framework that determines what causes BTC to pump or dump. Notably, this framework accounts for the fact that some of these factors change and interact with each other. However, the authors caution that it is theoretically impossible to predict BTC price action with 100% certainty, and there could be other frameworks that are much more accurate. Even so, the authors believe that their framework serves as a good starting point for figuring out what makes BTC's ticker tick.
This ties into the second part of the report, which seeks to set a foundation for the author's framework. The authors underscore the fact that BTC is not only scarce but its supply is predetermined by bitcoin's protocol rules. This makes it different from other assets which have less predictable supply dynamics.
In the third part of the report, the authors serve up the meat and potatoes: what determines BTC's price. The short answer is multiple factors, and what's interesting is that the authors look at these factors through the lens of momentum, specifically how they increase upward or downward price action. They again highlight the fact that these momentum factors can interact with each other and they often take turns being the primary drivers of BTC's price action.
The authors group these momentum factors into three categories: demand factors, supply factors, and structural factors. By the way, if you're enjoying the blog so far, be sure to smash that like button to help others find it and subscribe to the channel and ping the notification bell so you don't miss the next one.
Demand Factors
Now, when it comes to demand factors, the authors note that BTC's inelastic supply makes the demand side of the equation the most important. Within this equation, the authors identify six factors: sentiment, news, utility, macro, cyclicality, and accessibility. Starting with sentiment, the authors further divide this factor into three camps: long-term BTC holders, institutional investors, and retail investors.
The sentiment of long-term BTC holders can be assessed using on-chain analysis. For institutions, it can be assessed by analyzing the trading of BTC futures on traditional exchanges like the CME. For retail investors, it can be assessed by looking at metrics like web traffic. Not surprisingly, long-term BTC holders tend to sell when sentiment is high and buy when sentiment is low. Also not surprisingly, retail investors tend to be the biggest drivers of sentiment moves as they buy when the prices are high and sell when the prices are low.
On that note, the authors reveal that retail trading activity on Coinbase is still very low, suggesting that retail investors haven't really arrived yet, and that the current crypto bull market is about to enter its parabolic phase.
More about when altcoins could pump using the link in the description, but back to the three camps of the sentiment factor. Remember that institutional investors are in the third camp. Now what's fascinating is that BTC's price tends to follow whatever institutional investors are doing on traditional exchanges like the CME. In other words, they are ahead of the curve. Naturally, the authors note that all traders should therefore pay close attention to changes in things like open interest for BTC futures on the CME, as well as spot Bitcoin ETF inflows and outflows, as they can potentially predict how BTC will perform in the following hours or days.
We interrupt this program for an emergency crypto weather forecast. Get ready for a whirlwind of savings! We're seeing a high-pressure signup bonus system forming in the North, with some exchanges offering up to $660,000. Lush in the South, we'll be seeing some heavy discounts on hardware wallets, so watch out for those if you're going to be out and about. And then, over in central areas, there's a high chance of trading fee discounts, which should be setting in later on, up to 60% off. These deals are red hot, so make sure to take all necessary precautions. That's all for the forecast. Now back to our scheduled program.
Now, the next factor in the demand bucket is news. The authors recount how BTC hit local tops around major announcements, such as the launch of the Bitcoin futures ETF in October 2021. They acknowledge that the approval of spot Bitcoin ETFs seems to be one of the only exceptions. On the flip side, BTC has historically hit local lows during Black Swan events, such as the pandemic flash crash of March 2020.
It's safe to say there is no shortage of black swans out there these days, but so far, none of them have bitten BTC. Touchwood. Now, next we have utility. The authors admit that BTC doesn't have much utility these days beyond being a store of value. From their perspective, though, it is possible that BTC could once again be used for payments, this time in international trade. Some countries are reportedly using BTC for this already.
After utility, we have macro. The authors accurately point out that BTC's susceptibility to macro factors ultimately depends on its correlation to traditional assets such as stocks. Given that BTC's correlation to stocks has come down, it's likely that BTC is less affected by macro factors, black swans notwithstanding. To be clear, this doesn't mean that BTC isn't affected by macro factors at all, just that its price is affected less. This is something the authors stress, and they also stress that understanding which macro factor is moving BTC's price can be very difficult. This is an understatement given all of the geopolitical uncertainty floating around these days.
Anyways, cyclicality is the next subcategory of demand. Oddly enough, the authors don't provide much detail here. They just know that when the crypto FOMO kicks in, BTC tends to underperform the rest of the market, as everyone sells BTC for altcoins and meme coins. When the crypto FUD is still fueling sentiment, everyone flocks to BTC for safety, causing it to outperform other assets. Now, some would argue that the spot Bitcoin ETFs have affected this cyclical trend, but let's not go there.
Now, the final factor in the demand camp is accessibility, which is arguably the most important factor of them all. After all, if investors can't access BTC, its price won't pump, regardless of the demand. This is something the authors emphasize as well, as they know there are two ways to access BTC: natively through crypto exchanges and the like, and by proxy via ETFs and the like. If you like the blog which was on "Bitcoin Crypto Future", tell me in the comment section below and save my website for more blogs on Crypto !
Bitcoin Crypto Future by Haider
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