Institutions increase their holdings, the ecosystem has a good momentum, is there a chance that the Bitcoin bull market will continue?

After experiencing a new round of market shocks, as the price of Bitcoin rebounded, the panic sentiment in the entire market has eased a lot.
With the repeated collapse of altcoins, from the question of "Are there any more altcoins?" to the voices of various professional investors leaving the market, the past one or two months have been gloomy for the crypto market other than Bitcoin.
But no matter how panicky the market sentiment is, when asked which track the market is most optimistic about in the future, "Bitcoin ecosystem" is still the most popular.
In particular, the recent large-scale purchases of Bitcoin by institutions, the continued increase in the number of Bitcoin held by ETFs, and the rapid development of the Bitcoin ecosystem such as Stacks and Fractal Bitcoin have the momentum to drive a new round of market conditions.

01Institutional Holdings and ETFs

As a major Bitcoin holder on Wall Street, MicroStrategy has been buying again recently.
According to the latest SEC documents, MicroStrategy has purchased 18,300 bitcoins in the past month, with a total investment of about $1.11 billion, at an average price of about $60,655. Currently, MicroStrategy's total bitcoin holdings have reached 244,800, accounting for 1% of the total bitcoin issuance.
Three years later, MicroStrategy once again spent 1.1 billion to buy Bitcoin, which is undoubtedly a shot in the arm for the crypto market that has just shown signs of recovery.

Although the market has looked shaky in the past few months, and voices of "bull market is over" have been heard everywhere, the 13F documents disclosed by the SEC for the second quarter of 2024 show that as the price of Bitcoin fell, US institutions have been increasing their holdings of Bitcoin ETFs against the market trend:
According to Bitwise Chief Investment Officer Matt, the number of institutions holding Bitcoin ETFs increased from 965 to 1,100 in the second quarter. More than 130 institutions purchased Bitcoin ETFs for the first time in the second quarter, and the proportion of Bitcoin ETFs held by these institutions also increased from 18.74% to 21.15%.
Therefore, despite the sharp market fluctuations and even when the trend is not clear, these institutions are not scared away, but continue to increase their positions. It is conceivable that if it is a bull market, the number of institutions entering the Bitcoin ETF and the amount of purchases will be even more impressive.
Judging from the trend chart of the number of bitcoins held by the Bitcoin ETF since its issuance, this data has generally maintained a continuous upward trend over the past 9 months. Even during the period of drastic fluctuations in the crypto market, the number of bitcoins held by the entire Bitcoin ETF has not changed much.
Therefore, despite market fluctuations, Bitcoin's fear and greed index once entered the extreme panic range, and large US institutional investors continued to test the waters and buy.

Changes in the number of Bitcoins held by Bitcoin ETFs, source: Dune

02Fractal Bitcoin

Fractal Bitcoin is one of the most eye-catching projects on the market recently. In addition to the generous Airdrop that attracted a lot of attention, Fractal Bitcoin has exceeded 241EH in total computing power in just a few days since its launch, reaching 38.1% of Bitcoin's total computing power, which shows its popularity.

Fractal Bitcoin price and hashrate, source: UniSat Explorer, September 16, 2024

Fractal Bitcoin was launched by the Unisat team. As a team that has been deeply involved in the Bitcoin ecosystem and has received investments from top institutions such as BN, it was expected that it would receive such popularity after its launch.
Fractal Bitcoin is also the Layer 2 of Bitcoin, known as "the only native Bitcoin expansion solution at present". It focuses on stronger compatibility with Bitcoin and shared security. Without changing the original Bitcoin code, it improves transaction speed and increases transaction confirmation time to 30 seconds. Compared with at least 10 minutes of the Bitcoin main network, TPS is increased by more than 20 times.
Regarding the difference between Fractal Bitcoin and other Layer2 and sidechains, its founder was quoted as saying, "If other L2 and sidechains are like building another highway, then Fractal can build countless highways parallel to the Bitcoin mainnet. Each road can be used to expand the Bitcoin mainnet or to expand another road."
Of course, there are many plans for Bitcoin expansion. The ultimate goal is definitely to share Bitcoin's security to the greatest extent possible while greatly improving TPS, just like what Fractal Bitcoin wants to achieve, but there are almost no plans that have actually been implemented.
Ever since the Bitcoin ecosystem became popular, the Layer2 track has been crowded with various players. In addition to the original old-fashioned Layer2s such as Stacks and RSK, there are also the transformed RGB++, as well as a number of new Layer2s such as BEVM and Merlin. It can be said to be very lively.
However, who can truly take up the banner of Layer 2 of the Bitcoin ecosystem, bring DeFi, GameFi, NFT, etc. into the Bitcoin ecosystem, and at the same time introduce massive dormant Bitcoin into the entire pool of encrypted liquidity, currently requires further observation and verification.

03 Stacks Nakamoto Upgrade

As the most well-known Layer 2 in the Bitcoin ecosystem, Stacks ushered in the Nakamoto upgrade on August 28.
For Stacks, this upgrade is of great significance for four main reasons:

1) STX production is halved: After the Nakamoto upgrade, Stacks’ production will be reduced from 1,000 STX rewards per Bitcoin block to 500 STX, greatly reducing the inflationary pressure of STX.

2) TPS improvement of more than 60 times: Through this hard fork, Stacks’ block production is decoupled from Bitcoin’s block time, and the block confirmation time is reduced from more than 10 minutes to 10 seconds, and TPS is increased by more than 60 times.

3) Better security: After the Nakamoto upgrade, the new consensus mechanism writes the historical data of the Stacks chain into the Bitcoin block. Without changing the Bitcoin block data, the Stacks block data cannot be tampered with, further enhancing the security of the Stacks chain.

4) Decentralized anchored coin sBTC is launched: sBTC will be launched about one month after the upgrade. This is the first fully decentralized Bitcoin anchored coin. It does not require permission and is open to participation, making it more attractive to Bitcoin whales.

With the official completion of the Stacks Nakamoto upgrade, the battle for Bitcoin's Layer2 will become more intense. After all, the security of the Stacks main chain has withstood the test of the market for quite a long time, and after the upgrade, the security has been greatly improved, and the TPS optimization has also been greatly improved.
In addition, Stacks itself has high recognition in Europe and the United States and is the first SEC-compliant Token project. Its current ecological development level is also the best among all Layer2s. It already has certain first-mover advantages and is clearly a heavyweight player in the Bitcoin Layer2 competition.

04 Summary

Of course, in addition to these, the Bitcoin ecosystem has recently seen many other new moves, such as the Babylon mainnet launch in late August, which opened for staking, reaching the staking limit of 1,000 BTC in just three hours. The Airdrop expectations and Babylon's luxurious financing background have attracted considerable market attention. In addition, the recent launch of several OP_CAT protocols in the Bitcoin ecosystem is also in full swing.
In any case, compared with the dullness or even shutdown of other ecosystems, the wealth-creating effect and popularity of the Bitcoin ecosystem are visible. After the inscriptions and runes have been shut down one after another, there has been continuous innovation and vitality, and a large amount of resources and funds have flowed in, which is indeed worth looking forward to.