Crypto expert Duncan (@FloodCapital) recently expressed his powerful belief that Bitcoin has hit a market bottom and is poised for fresh all-time highs. His analysishosted on X (formerly Twitter), provides detailed analysis of current market dynamics and the fundamental factors that signal a bullish turn for Bitcoin and potentially other cryptocurrencies.

Has the Bitcoin price hit bottom?

In his in-depth analysis, Duncan pointed out that the cryptocurrency market has been underperforming relative to stocks over the past few weeks, a trend that had been a cause for concern until the key event regarding Mt. Gox. Duncan noted, “Yesterday’s Mt. Gox headline provided a reasonable explanation for the market’s recent behavior.” The expectation of the distribution of billions of Bitcoins to creditors was anticipated by insiders, which led to a short-lived market crash.

The situation was analyzed in detail by Alex Thorn, head of research at Galaxy Digital, who he suggested that the selling pressure from this event may be less severe than initially feared. As Duncan explained, “We wiped out the range lows, which led to about $300 million in long liquidations.” While these numbers are significant, they are modest compared to the liquidation events in March and April, where over $750 million was liquidated in three different 24-hour periods. This suggests a cooling market, which is also evidenced by reduced open interest in altcoins, lower funding rates, and a less bullish options bias.

Duncan noted that sentiment on Crypto Twitter is “literally the worst I’ve ever seen,” even though Bitcoin is down less than 20% from its all-time highs. This feeling is rooted in the traumatic experience of cryptocurrency natives who, after witnessing the altcoin boom surpassing Bitcoin and Ethereum in 2021, tried to predict a similar scenario this year, but were met with a drastically different market structure.

The inflow of capital into Bitcoin was significantly influenced by the development of ETFs – Blackrock filed an application to create an ETF in June 2023, when the Bitcoin price was $26,000. The approval and subsequent inflow of $14.3 billion into the ETF was a stark contrast to previous years, which were dominated by decentralized finance (DeFi) and high consumer interest in altcoins. “The capital is heavily bullish on Bitcoin this year, driven by its perceived stability and the formal structure of ETF financial products,” Duncan explained.

Essentially, Duncan highlighted Blackrock’s strategic moves in the crypto space. “With a $17 billion IBIT and a 25 basis point fee, Blackrock is poised to generate approximately $45 million annually from this ETF indefinitely,” he said. This steady revenue stream could be a precursor to more institutional products and greater acceptance of Bitcoin as a legal asset class.

Duncan also discussed the potential normalization of 1% Bitcoin allocations across mainstream investment portfolios, which he believes could result in significant future inflows. “If 1% becomes the global allocation standard for Bitcoin, we will have a lot of influence,” he noted, suggesting that the lack of such an allocation could soon be seen as strategic oversight. He added: “The great thing about these companies is that if you don’t have 1% in BTC, it’s essentially short/underweight BTC. This begins to reverse career risk from owning BTC to not owning BTC, which is a huge paradigm shift.”

Ethereum and the future of Altcoins

Returning to Ethereum, Duncan expressed optimism about the upcoming US Ethereum spot ETF, which he believes could outperform the Bitcoin ETF due to higher fees and potential staking revenue. “Blackrock’s most successful product launch ever will likely follow with an Ethereum ETF that could be even more profitable,” he predicted.

He criticized the current low expectations for the Ethereum ETF, which he attributes to widespread misinformation and an underestimation of its potential impact. “ETH ETF is likely a higher margin product for Blackrock, and adding staking could further increase its profitability,” Duncan explained, suggesting that integrating Real Assets (RWA) on-chain could boost its attractiveness.

At the time of publication, the BTC price was $61,764.

Featured image created with DALLE, chart from TradingView.com