Bitcoin (BTC) Spot ETFs Initially Hailed as a Major Shift for the Crypto Industry

Many believed these investment vehicles would unlock significant institutional demand, propelling Bitcoin to new heights.

The launch of Bitcoin spot ETFs was initially heralded as a major development that would shift the crypto landscape. Many anticipated these investment vehicles to unlock substantial institutional demand, ultimately propelling Bitcoin to new all-time highs.

However, since January 20, 2024, Bitcoin has struggled to maintain upward momentum, leading some to wonder if the market priced in perfection too soon.

Interestingly, examining historical market patterns may offer insights into Bitcoin’s current trajectory. Analyst Benjamin Cowen has pointed to similarities between Bitcoin’s ETF performance and the Nasdaq-100 ETF (QQQ) launched in 1999.

The QQQ ETF reached its peak 54 weeks after its inception, a timeline that aligns with Bitcoin’s peak 54 weeks post-ETF launch. This coincidence is remarkable, especially considering that this peak coincided with the U.S. presidential inauguration—a potential macroeconomic turning point.

"I still think about the QQQ and BTC ETF comparison a lot, even though I keep wanting to see some type of divergence. But rather than diverge, they continue to present similarities. I see a lot of people screaming that it's the golden age of crypto but Bitcoin has basically done what I expected it to do. It's stalled out at the presidential inauguration after a 54-week bull market. The QQQ ETF also peaked 54 weeks after its launch in 1999," said the analyst.

Memecoin Mania Drains Liquidity from Bitcoin & ETFs

A key issue in this cycle has been liquidity distribution. The emergence of memecoins has siphoned capital away from Bitcoin and other well-established assets.

Many retail investors were lured into believing in a “memecoin supercycle,” which ultimately saw most of these tokens collapse. This pattern closely resembles previous speculative bubbles, where hype-driven assets experience a brief period of outperformance before erasing gains.

Bitcoin dominance, which has climbed from 38% to 64%, showcases how capital is consolidating back into BTC. This trend suggests that investors are losing confidence in altcoins and prefer Bitcoin's relative stability.

Furthermore, the role of ETFs in this cycle has also been a subject of debate. While they increase Bitcoin's accessibility, they also raise concerns about long-term decentralization and institutional control over supply.

Echoes of the 70s? 'Left-Translated Cycle' Scenario for Bitcoin

Examining historical market cycles provides another interesting perspective. The 1970s, a period characterized by high inflation and economic uncertainty, saw two left-translated market cycles.

A left-translated cycle occurs when a market peak arrives early, leading to a prolonged bearish condition.

If Bitcoin follows this pattern, we might see a sharp decline in Q1 2025, followed by a temporary relief rally in Q2/Q3. However, if BTC falls below $70,000 soon, it may confirm a left-translated cycle. A lower high in the subsequent rally could set the stage for a recession in 2026. Conversely, if Bitcoin manages to maintain support above $70,000, it might still reach new highs later in this cycle.

As of press time, Bitcoin (BTC) trades at $86,034.03, with a 24-hour trading volume of $50,823,451,453. The price has dropped by 3.28% in the last 24 hours but gained 0.75% over the past week. With a circulating supply of 20 million BTC, its market capitalization stands at $1.7 trillion.