Bitcoin’s price since the beginning of October has been on a major upswing. Developments across the market, such as growing institutional adoption and the launch of a Bitcoin exchange-traded fund (ETF), are among the factors attributed to these gains.
Despite gaining by almost 100% since the lows of $30K reported in late July, one analyst still believes that Bitcoin has not yet entered into a “bubble”, predicting more gains to come.
The Real BTC Bubble is not here
“Bubbles form when the momentum of short-term returns attracts enough money that the makeup of investors shifts from mostly long-term to mostly short-term,” he wrote. This could add to the argument that the current bull market has been inspired by institutional investors and that retail investors have yet to join the rally.
Short-term holders are yet to enter the market with a strong upswing. These holders currently account for around 17% of the entire BTC supply, which is an all-time low in the entirety of Bitcoin’s supply.
The analyst also goes ahead to explain the instances when a market bubble is formed. He stated that an asset enters into a bubble when traders move rationally towards short-term traders and not when traders irrationally move towards long-term trades. These traders chase short-term trades to benefit from a momentum that was already feeding on itself.
Retail Interest in Bitcoin still Low
The current market cycle shows that retail interest in Bitcoin is still very low. Despite the 100% gains in BTC since the lows of $30K, retail investors are still not reacting to the fear of missing out (FOMO).
The FOMO levels in the market are significantly lower than in May this year when the market was at its peak and even lower than the 2017 bull market. Moreover, Google Trends shows that search terms related to ‘buy Bitcoin’ and other terms that show interest from new investors are relatively low.
As aforementioned, most analysts have attributed the recent rally to institutional investors. With the approval of a BTC futures exchange-traded fund in the US, these investors are expected to continue accumulating even more gains.
Bitcoin is just $2000 shy of reclaiming its all-time highs of $64,000. It is currently sitting on a six-month high of around $62,000, following a $20,000 gain over the past month.
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