After a strong correction in the market, triggered by a revival of geopolitical tension in the middle east, it seems that Bitcoin has found a solid floor around the $60-61k levels and has reacted positively as market participants are starting to price that geopolitical tension will not escalate. However, this geopolitical situation could change fast and short term volatility should be expected if the middle east situation changes.
In any case, our base case scenario is still a continuation of this bull market.
Now, if we leave the reason for this dip behind, we see that in any case, the market needed a flush to go back to more healthy levels. The high OI weighted funding rate that we witnessed as Bitcoin price accelerated was unsustainable in the long term.
Hence, the negative OI weighted funding rate that we had in the last weeks was something really positive for the market. In fact, the last time OI weighted funding rate turned negative was in October 2023 before Bitcoin ran from $27k to $46k without any meaningful dip.
Since the beginning of the bull market, Bitcoin has maintained its position as a leader. This is reflected by the uptrend in the “Bitcoin dominance” chart since the end of 2022. In other words, this chart tells us that, for now, the global altcoin market has not outperformed Bitcoin.
So far, this structure is similar to previous cycles where Bitcoin’s bull market starts earlier than most altcoins. Looking at the 2020 cycle, we note that altcoins start their bull market on average 150 days after Bitcoin.
Moreover, we also note that altcoins runs are more intense but way shorter. Again, if we look at the 2020 cycle, we note that altcoins bull market lasts, on average, 250 days less than that of Bitcoin.
The main take away from this short study is that, if the market follows a similar path to previous cycles, we should expect Bitcoin dominance to top and start a downtrend at some point in the future. This would be accompanied by an alt season where altcoins overperform Bitcoin for some time.
When we look at the performance of different asset classes since the beginning of 2024, we note that, even with the recent dip, Bitcoin is by far the best performer (46%) behind gold (16%). On the other hand, equities performance is lower but still positive while treasuries, as shown by the 7-10 US Treasury (IEF), has a negative performance so far in 2024.
Disclaimer: The information contained in or provided from or through this article (the "Article") is not intended to be and does not constitute financial advice, trading advice, or any other type of advice, and should not be interpreted or understood as any form of promotion, recommendation, inducement, offer or invitation to (i) buy or sell any product, (ii) carry out transactions, or (iii) engage in any other legal transaction. This article should be considered as marketing material and not as the result of financial research/independent investments.
Neither SBorg SA nor its affiliates (“Entities”) make any representation or warranty or guarantee as to the completeness, accuracy, timeliness or suitability of any information contained within any part of the Article, nor to it being free from error. The Entities reserve the right to change any information contained in this Article without restriction or notice. The Entities do not accept any liability (whether in contract, tort or otherwise howsoever and whether or not they have been negligent) for any loss or damage (including, without limitation, loss of profit), which may arise directly or indirectly from use of or reliance on such information and/or from the Article.