FameEX Hot Topics | Grayscale Report Identifies Bitcoin as Being in a Mid-Phase Bull Market, Anticipates Further Expansion

In the midst of a significant rebound in Bitcoin's value, Grayscale, in collaboration with researcher Michael Zhao, has presented a detailed examination of the ongoing bitcoin market cycle. This study aims to discern whether bitcoin is in the midst of a bull run by analyzing key drivers and their future implications on the market.

Over the last decade, the cryptocurrency market, with bitcoin at the helm, has demonstrated a pattern of alternating bull and bear phases. Grayscale's recent report posits that we are currently in a bullish stage of bitcoin's market cycle, fueled by an amalgamation of technical and fundamental factors. These range from inflows into spot bitcoin exchange-traded funds (ETFs) to the burgeoning total value locked (TVL) in decentralized finance (DeFi) platforms, pinpointing various factors that contribute to this upward trend.

Employing cyclical indicators, Grayscale's study suggests we are at the "mid-phase" of this bull market, analogous to being in the fifth inning of a baseball game, with expectations set for sustained growth. The report highlights bitcoin's attainment of unprecedented price levels in various currencies, indicating strong market momentum with potential for continuation. Zhao advises investors to keep a close eye on indicators such as spot bitcoin ETF flows and broader economic signals to gauge possible market shifts.

The analysis further investigates bitcoin's increasing dominance, asserting its role as a leading indicator for the wider crypto market's performance. With spot bitcoin ETF inflows serving as a key driver, there is a pronounced upward price pressure, reinforcing the optimistic market outlook. Additionally, the report identifies robust onchain fundamentals, including the rise in stablecoin inflows and TVL in DeFi, as critical elements underpinning the bull market's strength.

Zhao also points to a significant decline in bitcoin stored on exchanges, down 7% since May 2023, as indicative of a supply constriction partially fueled by ETFs moving bitcoin to secure, long-term storage. Data from Glassnode reveals that the percentage of total bitcoin held on exchanges has dropped to about 12% of the circulating supply, the lowest in five years.

However, despite these positive indicators, Grayscale and Zhao urge caution, noting mixed signals from retail sentiment and the unknown impact of new spot bitcoin ETF participants in potential market downturns. Concluding with a cautiously optimistic outlook, the study suggests bitcoin might be in the middle of a nine-inning cycle, specifically pinpointing it in the fifth inning, implying there could be more room for growth in this bull market phase.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.