Bitcoin (BTC) Fundamentals Are Underwhelming, but a New Bull Run Is Still Possible, CZ Says

Some have pointed out that the cryptocurrency's on-chain volume is nowhere near the 2021 peak. This has prompted someone to question whether a new bull

Despite Bitcoin's lackluster fundamentals, some believe the cryptocurrency is still preparing for a bull run.

The community has expressed increasing concern over Bitcoin's underwhelming fundamentals. Some have pointed out that the cryptocurrency's on-chain volume is nowhere near the 2021 peak, prompting one person to question whether a new bull run is actually coming this time.

However, Changpeng Zhao (CZ), the former CEO of cryptocurrency exchange Binance, has a different explanation for the declining fundamentals. He believes that Bitcoin is emerging as a reserve asset, which is why the on-chain activity is not reflecting the price action.

After the introduction of highly successful Bitcoin exchange-traded funds (ETFs), many investors are now getting exposure through them instead of directly buying and selling BTC. This would explain the lack of on-chain transactions despite the rising price.

“My gut feeling is that BTC is now more of a reserve asset and less of a transaction currency due to high fees and long block times. A lot of the new money is buying ETFs, which don't reflect in on-chain TX. I could be wrong,” CZ said.

This echoes the recent point made by Chris Kuiper, director of research at Fidelity's crypto unit. As reported by U.Today, Kuiper explained that the dominance of Bitcoin ETFs is the key reason why the mempool has become pretty much empty. Hence, the poor on-chain performance does not necessarily mean that another bull run is not possible.

Some analysts now expect Bitcoin to make a major move in the near future after its volatility reached its lowest level since the fourth quarter of 2023.

Bitcoin is currently changing hands at $97,190, according to CoinGecko data.