Bitcoin (BTC) Market Cycle Continues to Notch New Highs While Capturing Increasingly Larger Market Share

Bitcoin (BTC), the world’s largest cryptocurrency, continues to notch new market highs while capturing increasingly larger market share.

Bitcoin (BTC) price continues to set new highs for the year, and the world’s largest cryptocurrency is also grabbing an increasingly large share of the crypto market cap. Changes over the last 18 months may be setting the stage for a new market cycle and further bitcoin gains.

The bitcoin market cycle largely comprises periods of substantial gains followed by broader catch-up of the crypto economy. During this time, altcoins rise and BTC lags. Risk-off sentiment then pulls the cryptomarket down before bitcoin begins the cycle anew.

“Historically, bitcoin’s market share climbs during market downturn and recovery periods, then declines as speculative capital chases higher-beta bets deeper into the cycle,” explained Matthew Kimmell, digital asset analyst at CoinShares, in a recent insights piece.

Strong bitcoin adoption in the last 18 months led to growing concentration among digital assets. Kimmell notes that BTC currently accounts for approximately 60% of crypto’s market cap. Where historically this would have signaled potential weakening looking ahead, recent developments pave the way for the possibility of further growth.

Perhaps one of the largest drivers of ongoing future performance is the increase in institutional adoption. Spot bitcoin ETFs, interest from the executive branch, and a supportive regulatory environment all paved the way for greater uptake from institutions.

“Changes to the US accounting treatment of digital assets (FASB fair value rules) and the rescission of SAB 121 have opened new pathways for both corporations and banks to benefit from the economic opportunities offered by the bitcoin ecosystem,” wrote Kimmell.

Broader institutional adoption changes the potential fundamentals for bitcoin. Greater investment leads to greater liquidity and more price discovery. It could also lead to more sustained price outperformance than in previous market cycles.

As for volatility and the current market environment rife with political and economic uncertainty? That’s likely to be a boon for bitcoin as well.

“We find this turbulence, both in asset markets and government action, supporting bitcoin from a narrative perspective, bringing emphasis on its fundamental characteristics: neutral, borderless, self-custodial, and scarce,” Kimmell explained.

Investors with the risk appetite for crypto investing may want to consider the CoinShares Valkyrie Bitcoin Fund (NYSE:BRRR). The fund provides exposure to bitcoin’s price movements with the ease of access through traditional brokerages. Through BRRR, investors can capture bitcoin price movements while avoiding many of the extra steps required with direct bitcoin investment, such as storage.

BRRR seeks to reflect the price performance of the CME CF Bitcoin Reference Rate – New York Variant, minus fees and expenses. This index uses the same six bitcoin exchanges as the CME CF Bitcoin Reference Rate, but calculates bitcoin’s price at New York Market close (4 p.m. ET).

The fund is a trust that passively holds bitcoin (meaning it’s physically backed). Shares held are tied to the value of the bitcoin held. It also is not an investment company, and therefore does not fall under the 1940 Act. The bitcoin held is custodied by Coinbase (NASDAQ:COIN), BitGo and Komainu, with private keys kept in cold storage. In other words, the means to access the bitcoin held by the custodians remains offline, disconnected from the internet. This provides an extra layer of protection from hacking.

BRRR carries management fees of 0.25%.