Has the Bitcoin Cycle Formula Broken? Have Institutional Investors Changed the Market?

▲ 비트코인(BTC) ©고다솔

An analysis suggests that the Bitcoin (BTC) market no longer moves in the same way as in the past. With the trading patterns themselves changing since the inflow of institutional funds, there's a warning that the existing halving-centric cycle formula could also change.

According to crypto media outlet Bitcoinist on May 8 (local time), crypto analyst Darkfost diagnosed in a recent analysis that the Bitcoin market structure has quietly changed since 2018. He explained this with two concepts: 'institutionalization' and 'chopsolidation'. This means that with the increasing proportion of institutional investors, market volatility has decreased, and long periods of sideways movement have increased, making it more difficult to predict direction than in the past.

Darkfost presented changes in exchange inflow data as key evidence. In 2016, Bitcoin exchange inflows consistently remained at 20,000-60,000 BTC per day, regardless of the day of the week. At that time, the market was a retail investor-centric structure, moving 24 hours a day, independent of traditional financial markets. Currently, however, a pattern of significantly decreased exchange inflows every weekend is emerging. This indicates that the rhythm of traditional financial markets, which close on Fridays and reopen on Mondays, has begun to be reflected in the Bitcoin market.

The media explained that the inflow of institutional investors is behind these changes. The Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) in the US launched Bitcoin futures in December 2017, and Fidelity started cryptocurrency custody services in 2018. Subsequently, Bakkt introduced physically-delivered Bitcoin futures in 2019, and in 2020, Grayscale's and Strategy's large-scale Bitcoin accumulation strategies gained full momentum. Since then, an analysis suggests that Bitcoin's correlation with the US stock market and major stock indices has steadily increased.

Currently, Bitcoin is trading around $80,000, having largely recovered from its drop to the $60,000 range earlier this year. Technically, it is continuing its rebound by reclaiming the 50-week and 100-week moving averages, but the $78,000-$82,000 range has been identified as a key resistance zone. The media explained that this range is not merely a horizontal resistance line but a structural resistance area where medium-term trend indicators overlap.

Darkfost believes that if Bitcoin settles above $82,000 on a weekly basis, the trend could continue towards new all-time highs. Conversely, if it fails to break through, there is a possibility of a prolonged sideways movement centered around the $72,000-$75,000 range. He particularly assessed that the current trend, given that lows are gradually rising without a surge in trading volume, is closer to institutional accumulation than a simple short squeeze (buying pressure occurring to liquidate or cover short positions).

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*