Bitcoin [BTC] is regaining its bullish momentum after a significant downturn

Bitcoin [BTC] is regaining its bullish momentum after a significant downturn that saw its price plummet to a low of $78K

Bitcoin [BTC] is known for its decentralized nature, powered by a distributed ledger technology called blockchain.

As new users join the network, they contribute to expanding its overall adoption.

However, despite a recent surge in BTC’s price, which hit a new all-time high of $109K before pulling back to lows of $78K, its wallet count has shown minimal expansion over the past year.

As BTC is now making a strong recovery, concerns remain about the underlying network growth.

Jurrien Timmer, Director of Global Macro at Fidelity Investments, pointed out the lack of significant change in Bitcoin’s wallet count.

This raises questions about whether the latest price surge is fueled by organic adoption or short-term market speculation.

According to Timmer, the lack of new users engaging with BTC’s network can be attributed to the approval of U.S.-based spot ETFs and MicroStrategy’s aggressive accumulation strategy.

Institutional buyers, unlike retail investors, require only a few wallets to manage substantial holdings, limiting the apparent expansion of the network.

However, he remains confident in BTC’s long-term trajectory, noting that its adoption follows the S-curve seen in other exponential technologies.

Additionally, Bitcoin’s valuation adheres to the power law model, where its value increases as more participants engage with the network, reinforcing its long-term potential.

Taking to X, Timer added,

“Unfortunately, this will make it more difficult to track the adoption curve going forward.”

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According to Sina, co-founder at 21stCapital, wallet addresses are deviating from the decade-long trend.

Additionally, Chris Kuiper, director of research at Fidelity Digital Assets, highlighted Bitcoin’s underwhelming performance compared to traditional markets over the past four years.

While Bitcoin has recorded a 17% compound annual growth rate (CAGR), the S&P 500 is not far behind at 13%.

However, when factoring in risk-adjusted returns, BTC falls short, as investors have faced nearly four times the volatility for only a marginally higher return.

This further raised concerns about Bitcoin’s risk-reward profile, especially for institutional investors seeking more stable yet competitive investment opportunities.

Kuiper said,

“So this particular 4-year period has so far underperformed the previous cycles. If we really did peak earlier this year, then this will be quite the disappointing cycle.”

Kuiper acknowledges the possibility of an extended market cycle, suggesting that BTC’s trajectory may not follow past patterns rigidly.

Bitcoin’s current price action

At press time, BTC was trading at $88,036.11 after a 0.64% daily increase and also recorded a solid 4.90% weekly gain, according to CoinMarketCap.

Notably, its recent breakout above the $86,800 resistance on 24th March signals renewed bullish momentum.

Therefore, as Bitcoin continues to navigate market fluctuations, investors remain watchful for signs of a sustained rally or potential corrections in the coming weeks.

However, whether this price surge will drive adoption still remains a point of debate.