Bitcoin may return to its highs faster in the current cycle. What influences this

The current rise in cryptocurrency prices has not been accompanied by a corresponding activation of retail traders, experts say. We tell you what influences the market

Bitcoin's recovery to its previous all-time high could happen «much faster» in the current cycle, according to a new report from cryptocurrency research firm K33 Research, cited by The Block.

The price of the first cryptocurrency decreased after reaching a peak of $69 thousand. in November 2021 it already lasts 755 days, and as a percentage of the current exchange rate it is about 36%. Analysts estimate that after the end of the bull market in 2013, it took Bitcoin 1,178 days to reach a new high, and after its peak in 2017, it took 1,092 days.

Why is a Bitcoin spot ETF so important?

Various exchange traded funds (ETFs), including gold, have trillions of dollars in assets under management. It is generally accepted in the cryptocurrency community that even a small percentage of this capital can in the future affect the global crypto market. If spot Bitcoin ETFs are approved, the demand for cryptocurrency will increase: when buying shares of funds, it is implied the supply of Bitcoin as an underlying asset, that is, its direct purchase on the market, affecting the rate.

What is a Bitcoin ETF. How it works and how it affects the cryptocurrency market

Analysts at the Singaporean crypto company QCP Capital are also of the opinion that news about the consideration of applications for ETFs by American regulators provoked the current increase in the price of Bitcoin. But whether the rate can return to its historical maximum will depend on how significant the financial flows into the crypto market will actually be in the first weeks after the launch of the funds. If they do not exist, the very launch of funds will lead to a “classic” “sell the news” situation, the company’s experts write in an analytical note on the market on December 6.

The US Securities and Exchange Commission (SEC) has not yet approved any Bitcoin spot ETFs in the US market, but has approved several futures-based funds for the first cryptocurrency in 2021. The next deadlines for the regulator to make a decision on approval, rejection or postponement of decisions on applications from companies such as BlackRock, Bitwise, VanEck, WisdomTree, Invesco, Fidelity and Valkyrie are set for mid-January. Bloomberg ETF market analyst James Seyffart recently said that the potential approval window for spot Bitcoin ETFs is likely to be between January 5 and 10.

Trading data from institutional traders on the Chicago Mercantile Exchange (CME) also suggests that they are not yet taking profits, with annual premiums for BTC and ETH exceeding 17% and open interest at record levels. The premium is the difference between the spot price of an asset and its futures price. In November, CME for the first time surpassed the Binance exchange in terms of Bitcoin futures trading volume.

In traditional trading, Open Interest refers to the total number of buy orders available at the time the market opens.. In futures and options trading, open interest is the total number of contracts outstanding at a given time.. This includes futures contracts that have not yet been settled, have not yet expired, or have not yet been settled by delivery of the underlying assets.

Open interest serves as a metric to assess the level of involvement of market participants in a particular futures contract. An active growth in open interest combined with an increase in the price of an asset may indicate an active upward movement.

What is open interest. How to use the indicator in Bitcoin trading

Retail demand

According to analysts at K33 Research, the 164% increase in the price of Bitcoin over the year was not accompanied by a corresponding activation of retail traders. Website traffic data and stock exchange reports show that retail demand is now lower than in the third quarter of 2022, they added.

A similar trend is seen in Google searches for Bitcoin, Ethereum and other cryptocurrency-related terms, according to The Block.

Crypto derivatives trading in the non-U.S. market is also “showing no signs of a surge in retail activity,” and funding rates remain neutral, experts say.. There are some signs of “growing retail appetite” to build up long positions, but they have not yet reached serious levels, K33 analysts write.

“The fact that retail investor participation remains negligible so far indicates that Bitcoin has significant potential for further growth if the cryptocurrency returns to the spotlight,” they argue.

Prices are rising

Bitcoin is currently trading around $44 thousand. The price of the first cryptocurrency has risen more than 16% over the past week and 25% over the past month, returning to levels not seen in the market since the collapse of the Terra ecosystem in May 2022.

Bitcoin has fully recovered after the TerraUSD crash in 2022

As for altcoins, Ethereum has risen in price by 10% over the past week to more than $2.2 thousand, which is 86% growth since the beginning of the year. Solana (SOL) is up 5% over the same period, with the token's year-to-date growth exceeding 500%. Meanwhile, Binance's BNB traded flat last week amid the exchange's woes with US regulators that led to the token's price falling in 2023; since the beginning of the year, BNB has fallen in price by 6%.