Bitcoin returns to $29,000. Can the old narrative of institutional entry ignite a new bull market?

Bitcoin's recent return to $29,000 has raised questions about whether institutional entry can spark a new bull market.

According to OKX market data, Bitcoin surged by $2,000 in just one night, once again breaking through $29,000 and showing a 24-hour increase of 7.1%, leading other major altcoins. The Grayscale Bitcoin Trust (GBTC) rose by a cumulative 27% in the past two trading days (June 16th and June 21st), returning to its mid-April high.

Interestingly, this round of market gains occurred after many traditional financial giants such as BlackRock and Fidelity recently intensified their crypto actions, so the old narrative of “institutional entry” in the last bull market is once again frequently mentioned, but will this be the beginning of a new bull market?

Market Review: Altcoins Sluggish, BTC Leads

Due to the recent tightening of regulation and market maker exits, the crypto market has not performed well, and Bitcoin fell below $25,000 last week, reaching its lowest level since mid-March. The market has been moaning, and the bearish sentiment is strong.

However, in just one week, Bitcoin has regained its lost ground, rising from $24,800 to break through $29,000, an increase of nearly 17% in a week. In particular, last night, BTC made a strong move, rising more than $2,000 overnight, with a 24-hour increase of 7.1%. Many crypto investors exclaimed “the bull is back” after waking up, and the major communities began to become active.

Unlike Bitcoin’s strong performance, altcoins are relatively sluggish. In the past 24 hours, ETH has only risen by 4.3%, and among the top ten cryptocurrencies by market capitalization, only ADA (7.3%) has outperformed BTC. Among the top 50 cryptocurrencies by market capitalization, STX (21.3%), OP (15.7%), HBAR (9.5%), and ARB (7.8%) have performed well, while the rest of the cryptocurrencies have risen less than BTC.

In fact, over the past two months, the ALT/BTC exchange rate has been falling, and Bitcoin’s trend has been stronger than other mainstream coins. In terms of market share, BTC’s share has risen from 45% in early May to 47.37%, while ETH has been hovering around 18%.

Influenced by the overall market trend, the total market value of crypto has risen to $1,171.8 billion, up 5% in 24 hours. Since the beginning of the year, the total market value of crypto has accumulated to $3,401 billion, with a cumulative increase of 40.8%. Cryptocurrency user trading enthusiasm has clearly increased, and today’s fear and greed index is 59 (compared to 49 yesterday), with the degree of greed increasing from neutral to greed.

Coinglass data shows that in the past 24 hours, there have been $155 million worth of liquidations across the entire network, of which $72.79 million was related to BTC and $25.28 million was related to ETH. A total of 43,048 people became victims of the liquidation.

In addition, the discount rate of Grayscale products has improved. The net asset value discount rate of GBTC is currently 33.5%, and the price of GBTC has risen by more than 27% in the past five trading days. Since December of last year, the price of GBTC has increased by 120%, exceeding the increase in the spot price of BTC during the same period. The discount rates of other mainstream coin trust products are as follows: ETH (-46.84%), ETC (-55.64%), LTC (-42.43%), BCH (-16.67%), ZEC (-10.87%), ZEN (-1.79%), and BAT (-44.38%). There are six products with a premium, namely FIL (+278.5%), SOL (+178.22%), LINK (+100.2%), MANA (+93.44%), XLM (+53.53%), and LPT (+5.54%).

Publicly traded companies related to cryptocurrencies have also been affected by the rising trend, with stock prices up more than 10% in the past week. Among them, Coinbase (NASDAQ: COIN), a compliant cryptocurrency platform in the United States, rose 2.7% today to $57.09, while MicroStrategy (NASDAQ:MSTR), the largest bitcoin holding listed company, rose 6.8% to $313.4.

Influx of institutions, bridging the gap

One explanation for the recent rise is short covering. The intensified regulation in the past two weeks and the drop in bitcoin below the $25,000 support level have led to intense bearish sentiment in the market. Coinglass data shows that the BTC long/short ratio reached a minimum of 0.94 on June 13th, and 36% of respondents in market sentiment surveys said they were bearish, with 15% saying they were extremely bearish, more than half, and only 29% were bullish.

In addition, the positive news from the traditional financial giants’ recent actions, such as applying for bitcoin ETFs and trust funds and launching cryptocurrency trading platforms, has opened up channels for traditional funds to enter the market.

On June 15th, BlackRock, with a total asset management scale of $8.59 trillion, took the lead, and its iShares department submitted an application to the SEC for the iShares Bitcoin Trust. As a result, BTC rose nearly 5% that day, reaching as high as $26,500 and stopping the downward trend.

Morgan Creek Digital co-founder Anthony Pompliano commented that BlackRock’s move might attract other Wall Street giants to imitate, and many Wall Street firms may launch products that follow quickly to compete with BlackRock. Media attention may lead to capital inflows into Bitcoin.

The market has validated Anthony Pompliano’s prediction. Today, asset management company WisdomTree submitted a Bitcoin Trust Fund application, and asset management giant Invesco has also resubmitted its spot Bitcoin ETF application.

In addition, there are rumors that Fidelity has also started its crypto action. Andrew Blockingrish, co-founder of Arch Public, revealed that Fidelity, the world’s third-largest asset management company with $4.24 trillion in assets under management, may be considering acquiring Grayscale and applying for a Bitcoin spot ETF, which has not been officially confirmed by Fidelity.

Although Fidelity has not yet applied for a Bitcoin ETF, its investment in the crypto exchange EDX Markets announced yesterday that it will be officially launched soon, aiming to seize the market in the current regulatory prosecution of Coinbase and Binance. It is understood that EDX Markets is a non-custodial exchange that does not directly handle customers’ digital assets or directly serve individual investors, and only provides four cryptocurrencies for trading, including BTC, ETH, LTC, and BCH-these assets have not been recognized by the US SEC as securities. Looking at EDX Markets investors, it is backed by top traditional institutions, including Citadel Securities (with an asset management scale of $35 billion), Jiaxin Wealth Management, Sequoia Capital, Blockinradigm, Miami International Holdings, DV Crypto, GTS, GSR Markets LTD, and HRT Technology.

For professional investors, the entry of large traditional financial institutions not only plays a good demonstration effect, but they are also more willing to allocate investment products to investment tools supported by large traditional financial institutions, and more funds will enter the crypto world through bridges built by traditional institutions.

Of course, it seems too early to say that the bull market has started now, as the external financial environment has not improved significantly, and it is difficult for crypto finance to stand alone and develop an independent market.