Source: HTX Community

The influx of funds through Bitcoin spot ETFs, coupled with the rapid expansion of US debt and the upcoming halving of mining output in April, will further intensify Bitcoin’s supply shortage, thereby limiting the scope and duration of market corrections. Although ETH and many altcoins have yet to reach their previous highs, we believe that the influx of OTC funds into the market has initiated a positive cycle. The recent surge in meme coins serves as a precursor to the impending altcoin season. However, it’s important to note that BTC continues to face significant pressure, and contract rates remain high. Caution is advised against the risk of short-term deleveraging.

1.The confluence of BTC spot ETFs and BTC halving heralds the onset of a long-term BTC bull trend. US stocks, gold, and Bitcoin have all reached new highs, amplifying market risk appetite.

Benefiting from favorable economic conditions, the S&P 500 index hit a historic peak in January, closely followed by gold and Bitcoin in March, fueling market optimism. Historical data suggests that the previous bull market saw the S&P 500 index reach a new peak in August 2020, followed by an acceleration in Bitcoin’s ascent two months later, aligning with the current bull market trend. The surge in the stock market has bolstered risk appetite, leading to an influx of OTC funds into the cryptocurrency market, marking the beginning of Bitcoin’s primary uptrend.

2.BTC’s upward trajectory gains momentum following the S&P 500’s record-breaking performance. Behind the surge in US dollar-denominated assets was the rapid expansion of US debt.

Since June 2023, US debt levels have surged, increasing by nearly $3 trillion in just six months, surpassing a total of $34 trillion. According to Bank of America analysts, at the current growth rate, US debt is projected to increase by $1 trillion every 100 days, surpassing $50 trillion within the next decade. With no ceiling on legal currency and debt expansion, the finite supply of gold and Bitcoin makes them attractive investment options amidst expectations of escalating US debt. The rapid expansion of US debt is poised to drive asset prices higher, with gold and Bitcoin emerging as preferred assets for investors seeking scarcity amid growing debt levels.

3.Since June 2023, the scale of U.S. government debt has surged, while BTC spot ETFs have accelerated over-the-counter capital allocation, posing a challenge to the market value of gold.

Following the approval of the BTC spot ETFs on January 10, nearly $10 billion in over-the-counter (OTC) capital has flowed into Bitcoin, propelling its upward trajectory. Unlike previous bull markets characterized by multiple corrections exceeding 20%, the current bull market has seen fewer and less severe corrections, driven by sustained OTC capital inflows. Drawing parallels with gold ETFs, the launch of the first gold ETF heralded a decade-long bull run for gold, with gains exceeding 400%. However, Bitcoin offers enhanced security, convenience, and transaction speed compared to gold, positioning it as a superior store of value. The current market value of gold stands at US$14.5 trillion, while Bitcoin’s market value is only US$1.3 trillion, indicating that Bitcoin still trails gold by a factor of 10. The launch of Bitcoin ETF has garnered more popularity than the gold ETF of its time, with capital inflow far surpassing expectations.

BTC’s market value is on the verge of eclipsing that of silver, achieving in just 15 years what took silver millennia to accomplish. The next milestone will be to rival the market value and status of gold. While any investment carries inherent risks, BTC currently aligns with contemporary trends and enjoys greater favor among the younger generation compared to traditional gold. Winning over the youth is synonymous with securing the future. As millennials increasingly shape the zeitgeist, BTC is poised to shine brightly on the world stage.

4.Bitcoin’s upcoming halving event is set to further diminish supply, prompting anticipatory market speculation.

Bitcoin’s fourth halving event, scheduled for April 28, 2024, will reduce block rewards from 6.25 to 3.125 Bitcoins, further constraining Bitcoin’s supply and selling pressure. Historical data from previous halving events indicates a pattern of pre-halving price surges, with Bitcoin exhibiting an average 30% return in the 50 days leading up to the event.

During this bullish market phase, ETFs have spurred significant demand for Bitcoin. Furthermore, the upcoming fourth halving event will compound Bitcoin’s scarcity by reducing its supply further. With approximately 50 days remaining until the halving, Bitcoin is likely to experience upward fluctuations until the event concludes.

5.With ample market liquidity and the onset of the bullish market cycle, the potential for an altcoin season looms as the risk-free interest rate surpasses 10%, drawing further OTC funds into the market.

When the crypto market becomes active and sentiment is hot, the demand for leverage will increase, thereby increasing lending rates. The interest rate on Binance USDT demand deposits has reached 18%, which is much higher than the 5% interest rate on U.S. Treasury bonds, which will also attract over-the-counter funds to enter the market for arbitrage. Market funds are becoming more and more abundant, and excess liquidity tends to flow into popular sectors. Sectors that continue to rise will attract more funds into the market, forming a positive cycle of continued bull market capital inflows.

As a result, the market demand for stablecoins continues to increase. USDT has continued to be issued since October 2023, and its market value has exceeded US$100 billion. With the continued inflow of OTC funds, the current bull market will rise longer and with greater magnitude.

6.The market value of USDT has exceeded US$100 billion, and retail investors are entering the market, but there is no sign of a market peak yet.

After Bitcoin strongly exceeded $60,000, market sentiment was high and Meme coins began to rise sharply. New Meme coins such as PEPE and WIF have increased tenfold, while old Meme coins such as SHIB and DOGE have also performed impressively. News headlines about the skyrocketing cryptocurrency prices and various stories of retail investors getting rich are widely spread on social media, attracting more retail investors to enter the market.

7. Meme coin frenzy attracts retail investors, signaling a broader altcoin season.

Large gains in Meme coins in the past have usually signaled the end of a bull market, however, it may be too early to talk about a top. Judging from Google search trends, searches for the keyword “Crypto” have been rising since the second half of last year, and have accelerated this year, but the extent has only reached half of the peak of the last bull market. In other words, retail investors are entering the market, but there is no sign of a top yet.

8. The Google search index of “Crypto” has reached half of the last bull market. Meme is just an appetizer. The strong ETH indicates that the altcoin season is coming.

Although Meme coins have performed well, most altcoins still underperformed BTC in price growth, and there has not yet been a comprehensive bull market for altcoins. However, the rise of Meme coins has opened up the market’s imagination. At the same time, the altcoin king ETH has begun to strengthen, and the ETHBTC exchange rate has rebounded from lows, which may indicate that a broader altcoin season is coming. Since the Shanghai upgrade last year, the amount of ETH pledged has continued to rise. The number of pledged ETH currently exceeds 30 million, which means more than 26% of ETH is locked, which has greatly reduced the supply of ETH. At the same time, activity on the Ethereum chain increases Gas Fee and accelerates the burning of ETH. According to the calculation of the speed in the past 7 days, 260,000 ETH will be burned every year, which means that the total amount will decrease by 1.4%, which will make ETH more scarce. In addition, Eigenlayer TVL, a popular re-pledge project this year, has exceeded US$10 billion, which has also brought a large amount of pledge locks to ETH.

After the BTC spot ETFs were approved, giants such as BlackRock have begun preparing applications for the ETH spot ETF, which will be approved as soon as May this year. This will make the market turn its attention to ETH and other altcoins. We will see More copycat craze.

9. BTC is showing signs of being overbought in the short term, with lingering pressure from previous highs.

BTC’s rise is astonishing. Including March, it has achieved 7 consecutive monthly positives, which is very rare in history. Even in the bull market of 2020-2021, BTC has only had 6 consecutive monthly positives. It is obvious that BTC has become overbought in the short term. In addition, BTC hit a historical high and then pulled back, triggering a sharp decline in the market. US$69,000 has become a strong pressure level. Bulls need time to regroup, and BTC may fluctuate below 69,000 for a period of time, completing consolidation and changing hands before breaking through.

10. BTC’s monthly chart has been positive for 7 consecutive days, the contract fee rate is on the high side, and we should be wary of deleveraging risks.

Since late February, contract fees have increased significantly, reaching their peak in early March, with almost all altcoins’ annualized fees exceeding 100%, which means that the market’s leverage has increased significantly. After a sharp correction on March 6, contract rates decreased, but then began to rise again. It can be seen from the contract rate heat map that the market is showing signs of local overheating. Although there are no signs of a top yet, the high contract rates will still weaken the power of bulls, and we need to be alert to the risk of the next deleveraging. The market is showing signs of local overheating

In any case, the BTC long-term bull run is underway, with funds continuing to flood into the cryptocurrency market, paving the way for an imminent surge in altcoins.

Disclaimer: This article is not the official content of the Huobi community. The above content is for reference only and does not constitute any investment advice.