Bitcoin is a hot topic lately, with the price going up and down. It’s been interesting to watch the news and see how analysts are interpreting these movements.
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Both stocks and gold have been trading lower since mid-April, according to Coinbase. This is happening alongside a stronger dollar. In April alone, Bitcoin saw a decline of 16%, which is the biggest drop since June 2022.
However, David Han and David Duong remain optimistic. They observe that the maximum drop of Bitcoin from its peak stands at 23%, which falls within its historical range. They anticipate that this diminishing trend in drop percentages will persist as they believe Bitcoin is becoming more acknowledged as a macro asset.
What I found interesting was the talk around Bitcoin ETFs. These are investment funds that follow the price of Bitcoin. The researchers point out that although capital inflows into Bitcoin ETFs have slowed, these ETFs do not solely determine the value of Bitcoin. They claim that global demand trends still largely shape BTC’s price discovery. This seems reasonable since Bitcoin is traded in various platforms worldwide thus global forces should affect its price.
Moreover, I am intrigued by comparisons to gold. Despite a 12% rise in gold prices this year, the largest US gold ETF has experienced net outflows worth $3 billion dollars. This implies that American ETF inflows do not always represent international pricing trends elsewhere in the world . Therefore we should also consider worldwide aspects when analyzing bitcoin prices.
I also found it interesting to learn about the extent of bitcoin trading on centralized exchanges (CEXs). During the first three months of 2024, the average daily trading volume on CEXs amounted to $18.8 billion. This is over eight times greater than that for US spot ETFs in any given day during that same time period. What these numbers show is there’s a lot more going on outside of ETF market; and therefore what this means is not only price discovery for Bitcoin still remains more tied up with global demand.
In general, I think there are some intriguing patterns within Bitcoin. It is positive that people have started recognizing it as an asset with macro implications and such wide-spread presence across world markets.
While they do matter quite significantly – my point here being while ETFs matter greatly for driving up prices; however their importance cannot be overemphasized because apart from them other things too drive up prices like international demand trends coupled with large-scale trade carried out via CEXes which operate globally . Thus, despite recent fluctuations in value this makes me optimistic about where BTC might be headed next
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