Bitcoin's underwhelming fundamentals have become an increasing concern within the community.
Some have pointed out that the cryptocurrency's on-chain volume is nowhere near the 2021 peak.
This has prompted some pundits to question whether a new bull run is actually coming this time given how weak the cryptocurrency's fundamentals seemingly look.
However, Changpeng Zhao, the former CEO of cryptocurrency exchange Binance, has opined that the declining fundamentals can be explained by the fact that Bitcoin is emerging as a reserve asset.
After the introduction of highly successful Bitcoin exchange-traded funds (ETFs), many investors are now getting exposure through them.
Tomiwabold Olajide"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. According to SoSoValue data, BlackRock's IBIT alone boasts $57.5 billon worth of net assets.
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. The flagship cryptocurrency has been struggling to regain ground after losing the $100,000 level on Feb. 4.
Dan Burgin
Vladislav Sopov