Bitcoin reaches ATH, has bull run season arrived yet?

We're at the beginning of 2024 and Bitcoin just hit its ATH (highest ever), memecoins are once again popular, and decentralized finance projects are bringing in incredible profits.
Bitcoin price increases, celebrities change their opinions
Partly explaining this new record, analysts believe that Bitcoin is starting to drive capital flows into Bitcoin spot ETFs (exchange-traded funds), not the other way around.
Spot Bitcoin ETFs are seen as a key driver of the digital asset's recovery this year, but David Lawant, head of research at crypto brokerage FalconX, says the That system is about to change.
“If up until about a week ago, spot ETF inflows were pushing prices up, my impression is that prices have recently, at least to some extent, started to drive inflows as well,” David Lawant said last week.
The market is now entering a phase that Lawant expects will be more reflexive. Reflexivity refers to a feedback loop in which market trends and the fundamentals that influence them can reinforce each other.
In this case, it would cause Bitcoin prices to increase, which would then drive capital inflows into Bitcoin spot ETFs, which would push prices higher.
Bitcoin's price increase also makes many people change their opinions about crypto.
The Financial Times, perhaps the most active crypto critic of the past decade, has admitted that perhaps Bitcoin has a purpose. Recently, this UK-based newspaper published a commentary by Ruchir Sharma, Chairman of Rockefeller International, titled “After being labeled fanatics, Bitcoin supporters are certainly feeling vindicated".
Bitcoin has traditionally behaved like penny stocks with a tendency to pump and dump, but Sharma said the Bitcoin bubble bursting and quickly recovering “suggests something real and sustainable is happening.”
“There's a saying on Wall Street for moments like this: only the idiots are dancing, but the dumber guys are watching,” Sharma added.
Meanwhile Donald Trump, who called crypto a “scam” in 2021, said on CNBC last weekend that he is “enjoying” crypto. He also called Bitcoin “an additional form of currency”.
It takes more time for prices to increase strongly
However, despite these optimistic signals, it may take a while for everyone to feel the heat from the bull market.
Specifically, Bitcoin's market dominance rate is currently at 50% compared to 41% at the record price in 2021, according to CoinGecko data. This higher dominance rate shows that the current environment is not as bullish as last season, with investors favoring Bitcoin over other crypto assets with higher levels of risk.
Bitcoin hitting its ATH appears to have created around 1,500 new “millionaire wallets” every day, according to crypto analytics firm Kaiko Research. However, the rate of creation of these wallets is still lower than the last bull run in 2021, when more than 4,000 wallets reached the million USD mark every day. The highest level this year to date is 1,691 wallets on March 1.
According to Kaiko, there are a number of reasons that can explain this trend. New capital has not yet been fully pushed into the market; Big whales are taking profits as Bitcoin hits new ATH; whales are storing assets on custodial platforms, instead of personal wallets.
“In 2021, there was a huge influx of capital into the market from multiple sources as bulls sought to benefit from the crypto euphoria,” the report said. “This time, whales may take a more cautious approach, waiting to see if profits are sustainable before investing.”
Meanwhile, venture capital funds with heavy-handed investments are no longer seen much. According to data tracker PitchBook, in the fourth quarter of 2023, funding for crypto-related companies reached only $1.9 billion, the lowest amount since the same period in 2020.
Until investments return to the market in earnest—and not just to gain exposure to Bitcoin—it's impossible to say bull season has truly arrived.
However, traders are excited about the current price levels. And FalconX's David Lawant said it could take some time for the market to see a strong rally.
“If the previous cycle provides any indication, it is that we could hover around current prices for some time before decisively entering a new phase of the bull market,” Lawant said. “All market signals to date point to a continuation of the bullish trend.”