Bitcoin Market Structure Shifts With 2024 ETFs, Institutional Influx

The founder of CryptoQuant, Ki Young Ju, has highlighted a significant shift in the Bitcoin market structure, noting that it has transitioned from a traditional model dominated by whales and retail investors to a more diverse landscape. This change is attributed to the increasing participation of institutional investors, such as ETFs and MicroStrategy, as well as government agencies. The influx of these new players has introduced new sources of liquidity, altering the market dynamics and potentially rendering traditional market cycle theories obsolete. According to the founder, the market is currently in a transitional phase, absorbing new liquidity and adapting to the changing environment.

One of the key factors contributing to this diversification is the introduction of spot Bitcoin ETFs in January 2024. These ETFs have altered the market landscape while maintaining the same investor psychology, albeit on a larger scale. The founder emphasized that despite the change in market structure, the behavior of investors remains largely the same, with aggressive profit-taking being a consistent trend since the beginning of 2024. The net profit realized at 7 days (7DMA) for Bitcoin has remained strongly positive, indicating that investors are actively taking profits. This trend is similar to past cycles, such as in 2021, where high profit-taking often preceded a local peak or a sharp correction in the market.

The founder's analysis also points to differences in the current market structure compared to previous years. For instance, the macro-economic and global framework in 2021 was significantly different from the current environment. The founder draws parallels with 2017, the first year of Donald Trump's presidency, suggesting that the current situation may have more similarities with that period. This comparison highlights the unique challenges and opportunities present in the current market.

The founder's observations also touch on the global financial markets, noting a period of uncertainty and fear. This is evident in the gold price, which has reached all-time highs and remains within an ascending channel since mid-December. Despite this, there has been a notable rebound in risk-on assets in recent weeks, following the declines in March and April. The weakening of the dollar, as indicated by the Dollar Index (DXY), has also played a role in supporting Bitcoin's price. The DXY has been within a descending channel since Trump took office in January, with a recent mini-rebound that has not significantly altered the overall trend.

The founder's insights into the Bitcoin market structure provide a nuanced view of the current landscape. The diversification of the market, driven by the introduction of spot BTC ETFs, has led to a more complex and varied investor behavior. While the current market structure shares similarities with past cycles, the unique macro-economic and global framework of 2024 presents new challenges and opportunities. The founder's analysis underscores the importance of understanding these dynamics in navigating the ever-evolving cryptocurrency market.