A 10% Gain in 24hr Helps Bitcoin (BTC) Regain $30,000 – What is Fueling This Rebound Upwards?

Wednesday has brought a flood of green to the digital asset market, with select projects (ie. Render Token) seeing gains of 30% over a 24hr period.  Looking to the worlds largest digital asset, how has a welcome reprieve from a week-long downturn played out Bitcoin (BTC)?

Market Movers

Before diving into some of the performance metrics pertinent to Bitcoin (BTC), lets take a look at a few examples of events over the past week that may be playing a role in the recent market reversal.

First Republic Bank – The Next Domino to Fall?

Just when fears stemming from the collapse of SVB, Signature, and Silvergate were beginning to abate, similarly troubled First Republic Bank (FRC) has seen its stock price plummet, bolstering the belief that it will soon be seized.

While the collapse of a regional bank may not seem pertinent to the price of Bitcoin (BTC) at first glance, such a development is one of the main reasons Bitcoin (BTC) was created in the first place – to reduce counterparty risk through the removal of trust.

By allowing for peer-2-peer transactions, Bitcoin does not require exposure to a financial middleman taking part in fractional-reserve lending simply to transact value.  By removing the need for trust in a third-party, and promoting users to ‘be your own bank', BTC holders can shield themselves from the failures of centralized entities susceptible to the whims of regulators.  Markets are realizing this, and responding accordingly.

Furthermore, with yet another bank on the verge of collapse, there are those that belief the Federal Reserve will be more inclined to reverse course on future interest rate decisions in order to avoid similar issues from continuing to occur.

Digital Assets & International Settlements

With the US continually weaponizing the USD for years, affected nations are finally banding together in an effort to avoid financial sanctions and grease payment rails between like-minded countries.  This is none more evident than among what are known as the ‘BRICS' nations – Brazil, Russia, India, China, and South Africa.

Interestingly, as these nations distance themselves from the USD, there have also been examples of major digital asset adoption coming out of Russia.  This was most recently highlighted when not only did Binance resume operations within the nation, but local reports indicated the Russian central bank would soon begin using digital assets to settle international payments.

While a development such as this may prove to be a boon in the short-term, as it is perceived as a step towards major adoption, it may also prove to be controversial in the months to come.  No doubt, there will be U.S. regulators that will use it as an example of the risk that BTC can pose, as it provides rival nations a means to de-weaponize the USD and more easily circumvent financial sanctions.

World Economic Forum Recognizes Potential of Flare Gas Mining

In a surprising move, a video published by the World Economic Forum, which paints Proof-of-Work mining operations as a potential solution to methane gas emissions, has been circulating social media platforms.  This video is particularly notable not only due to the positive light that it shines upon flare-gas powered mining operations, or ‘data centres' as it calls them, but due to the stark contrast in approach towards the sector by the WEF, which has in the past been quite anti-Bitcoin while making outlandish claims –  like in 2017 when it shared its belief that “In 2020 Bitcoin will consume more power than the world does today,”.

While the aforementioned video may be a far cry from being able to say WEF has ‘seen the light' with regards to Bitcoin, such a change in perspective has been known to occur in the past.  Just look at Michael Saylor, who has, arguably, become one of the worlds biggest Bitcoin maximalists.  Dating back to 2013, Saylor had predicted in a tweet that “Bitcoin days are numbered.  It seems like just a matter of time before it suffers the same fate as online gambling,”.  Ten years later, and MicroStrategy now holds over 140,000 BTC in its treasury.

For now, the video is being shared and heralded by many that believe it marks a shift in sentiment towards the environmental impact of PoW mining operations.

Sentiment and Metrics

At time of writing, Bitcoin (BTC) has essentially erased all losses from the past week, and is well on its way to continue its upwards trajectory in place since 2023 arrived.  While the above developments may partly be the cause of recent market movement, the following metrics provide even more insight.

Fear and Greed Index

One of the more popular ‘catch-all' metrics that BTC enthusiasts watch is the Fear & Greed Index, which looks at the asset from a variety of perspectives (market momentum, social media sentiment, etc.) to provide a general idea of market health.

Source: alternative.me/crypto/fear-and-greed-index/

Throughout past market cycles, the Fear and Greed Index typically peaks in the low-90's (on a scale to 100) during bull cycles, and bottoms out in the low-20's.  Currently sitting at 58, this figure it on the rise from lows experienced in the recent crypto-winter as the next halving approaches.

Price and Volume

So what has improving sentiment and a rising Fear and Greed Index meant for the price and trading volume of BTC? The complete erasure of a week-long market downturn.

Source: CoinMarketCap – 7Day BTC/USD

As previously indicated, the dramatic turnaround of the past 24hrs was building on the back of various positive news developments for the Bitcoin narrative.  The potential collapse of First Republic Bank has simply provided the fuel needed for the final push through resistance.

At time of writing, Bitcoin (BTC) sits at $29,942 and rising, with a 24hr trading volume eclipsing $24.5B.

Market Dominance

When a bull-cycle arrives, the market dominance of Bitcoin (BTC) is typically rising as traders look to ‘ride the wave', only for it to begin tapering off at the height of such cycles as interest shifts to smaller-cap alternatives for even more gains.  This activity often results in a BTC bull market being superseded by what many call ‘Alt-Season'

With BTC market dominance on a steady uptrend over the past six months (after bottoming out around ~40%) alongside asset price, many are viewing this as yet another sign that the digital asset market is in the beginning stages of its next bull cycle.

At time of writing, Bitcoin (BTC) market dominance is sitting at roughly ~47% and rising.

Lightning Network Capacity

For Bitcoin to succeed in the long run, it cannot just keep repeating the same cycle of hope-based speculation touting the potential for BTC to change the way we transact value.  For this next cycle to improve upon the last, Bitcoin itself must improve.  This means not only spreading awareness, but providing increased functionality to each and every new network participant.

While BTC has long functioned extremely well as a means for transacting large value, it is the rapid development of the Lightning Network that will allow for it to work as a currency.  Thankfully, this layer-2 solution is seeing promising levels of both development and adoption.  Just look at the following chart, depicting the capacity of this network over time.

Source: bitcoinvisuals.com

This growing capacity means that transactions of increasingly larger size can safely be processed across the network.  Combined with various services like Strike, and exchanges like Kraken adopting use of the network, the future has never looked brighter for BTC – and market sentiment is showing it despite regulatory headwinds within the U.S.

PlanB S2F Buying Plan

With the thaw of crypto-winter, many are once again turning to the Stock-to-Flow projection model made popular by analyst PlanB.  The model, which predicts the future price of Bitcoin based on supply and demand, has for the most part been fairly accurate since its inception.

In a recent tweet, PlanB put forth the idea that buying BTC 6mths pre-halving, and selling 18mths post-halving may yield higher returns than simply buying and holding.

Source: Twitter @100trillionUSD

If a true believer in the S2F model, this may be an prudent approach to the market.  However, many are not yet convinced that S2F will remain accurate over time.  In fact, during the most recent bear market the model was invalidated.  While many point to this being a result of unforeseen macroeconomic factors wreaking havoc on markets as a whole, other remain unconvinced.  For the time being however, S2F appears back on track.

Predictions

Taking the above developments and asset performance in to account, a variety of banks and investment firms have continued to share future expectations for the price of Bitcoin (BTC).  The following is the most recent example of these, coming from British multinational bank ‘Standard Chartered'.

Standard Chartered – BTC to Hit $100,000 in 2024

In a recent look at what the future may hold for Bitcoin, Geoff Kendrick, Head of Digital Assets at Standard Chartered, shared his belief that not only is the most recent crypto-winter now over, but that, “…the pathway to the USD 100,000 level is becoming clearer,”.

Notably, Kendrick cites the ongoing issues plaguing the U.S. banking system and how it underscores the narrative fueling Bitcoin that touts the need for a decentralized, trustless, and finite medium for value transfer.

In addition to his price prediction, Kendrick also shared that he believes we will see Bitcoin (BTC) market dominance continue to rise over the next few months, “…into the 50-60% range”.

Final Word

As it stands, there is an overwhelming amount of metrics and developments that point to a bright future for Bitcoin (BTC) in both the short and long term.  While regulatory headwinds remain in the U.S., it is important to remember that Bitcoin does not recognize borders, and functions on a global scale.

For now, digital asset markets seem primed for another jump upwards as the potential collapse of First Republic Bank has re-stoked fears surrounding the weakness and risk involved with the U.S. banking system.  Combined with increased adoption and lofty price predictions, and it is easy to see how BTC was able to reclaim the $30,000 marker in a matter of hours.