Bitcoin is the largest cryptocurrency in the world, boasting the highest market capitalization level and a high number of users. The main reason for this is simply that it was one of the first digital currencies to appear on the market and has, therefore, had more time to consolidate its position and improve itself. However, over the following years, several altcoins entered the financial landscape as well. Most of them offered an increasing number of uses, focusing on alternative functionality such as decentralized applications and smart contracts. Nonetheless, the BTC price remains stable, with the coin being so influential that both its upward and downward price movements affect the entire market.
Since volatility and fluctuations remain a concern for many investors, it’s essential to be aware of the market trends in order to develop a good strategy that can help keep your investment portfolio profitable.
July woes
The summer of 2024 hasn’t been the greatest for Bitcoin in spite of the coin’s strong performance at the beginning of the year. July has found Bitcoin in a slump as well, and many investors have been worried about the values going even further down in the upcoming months. Bullish traders, in particular, are concerned about the possibility of unrealized losses. So far in July, Bitcoin has closed below the May lows, but many are certain that it will only be a matter of time before the king of crypto bounces back up and returns to its previous levels.
This is nothing new for BTC, as the marketplace tends to move between lower and higher areas. Historically, this has occurred many times, and Bitcoin has always managed to not only return but even exceed previous levels. The recent halving and ETF approval are also positive for market development, but it will likely still be some time before their effects become more apparent.
Miners
The miners are individuals who use both hardware and software to create new Bitcoins, as well as process and validate blockchain transactions. Mining is a resource-intensive activity that requires quite a lot of resources, something climate activists have been quite critical of. The carbon footprint of digital currencies can indeed be quite elevated, but several things could improve this situation, such as using renewable energy sources. In the aftermath of the latest halving, analysts believed that the miners would have no choice but to upgrade to newer apparatus and devices or relocate to a region where electricity prices are more affordable in order to maintain profitability.
Many of those who couldn’t afford to adopt these methods had no choice but to become obsolete. At the beginning of July, the BTC blockchain’s hash rate went down. This metric monitors changes in the network’s computing power, and the fact that it dropped to levels not recorded since December 2022, when Bitcoin was deeply entrenched into a bearish market trend, has been an indication of miner capitulation. This scenario refers to the situation in which miners have no choice but to sell their Bitcoin reserves as they start losing money.
This generally causes prices to drop overall, an event that can sometimes cause an event known as a “death spiral”, something that happens as a result of continuous selling pressure and which has a cascading effect as more and more mining operations are taken out until none remain. Capitulation is typically regarded as a buy signal by investors. Some market researchers believe that the recent network decline, which many have regarded as a long-standing phenomenon that began roughly two years ago, is nothing more than a reflection of corporate entities beginning to trade and invest in crypto assets.
Bitcoin Runes
The Runes protocol is one of the latest newcomers on the Bitcoin blockchain, arriving on the market in April 2024. As usually happens with new crypto assets, it was immediately popular upon its arrival. This is to be expected as a result of the hype that typically surrounds new holdings. The holdings initially dominated daily transactions, accounting for over 50% of them over thirteen separate days. However, these levels have been declining over the past month, and some investors believe this is essentially the end of the Runes protocol, or at least of its market dominance.
Bitcoin returned to its former glory, representing more than 90% of all transactions. The Runes, on the other hand, are less than 8%, while the Ordinals and BRC-20s claimed 0.4% and 1.1%, respectively. Two months after the launch, the Runes earned approximately 2,500 coins in fees, which dropped to only 41 over the following month. This is a clear indicator of the shifting investor sentiment. It also proves once again that Bitcoin remains the uncontested king of crypto and that even if its popularity drops momentarily, it always comes back stronger sooner or later.
Bitcoin DeFi
Decentralized finance, commonly referred to as DeFi, is an emerging tech development based on ledgers similar to those that distribute cryptocurrencies. As a concept, researchers believe that it can become a contender for the mainstream spot of the traditional banking system and its centralized features. The purpose of decentralized finance is to eliminate third parties and instead promote and foster peer-to-peer transactions. Bitcoin has not yet taken part in this industry, but many analysts believe that it is only a matter of time.
According to this hypothesis, the rise of assets and holdings like the Runes and BRC-20 is a clear indicator that things are moving in that direction for Bitcoin. Proponents of this theory believe these assets are a stepping stone in the evolution of decentralized finance on the Bitcoin blockchain. During its earliest days, Bitcoin was a peer-to-peer electronic cash system that became a store of value, handling over $1 trillion worth of wealth as of 2024. There’s also been an increasing push to add more utility to the blockchains over the last two years, so it’s not far-fetched to believe that this is the direction the market is taking.
Bitcoin remains the most important cryptocurrency in the world, and it remains relevant even when its price doesn’t record top performance. Investors who want to ensure the safety of their portfolios need to devise a strategy that guarantees the consistency of their revenue stream.
