Bitcoin Capital Efficiency Significantly Declines in Each Bull Market
According to Coindesk, the price increase brought by every $1 of new investment in Bitcoin has been continuously decreasing in each bull market.
In the 2011 bull market, approximately $2.8 billion in net inflows drove a 55,000% increase; in 2015, $69 billion in inflows resulted in a nearly 10,000% increase; in 2018, $365 billion in inflows led to about a 2,000% increase; and in the current round since 2022, $697 billion in inflows have yielded a return of only 689%.
Ki Young Ju, founder of CryptoQuant, believes that Bitcoin needs to become a core macro asset, rather than relying solely on retail investors and ETFs. Only by absorbing over $1 trillion in new funds can the next parabolic rise occur, significantly enhancing institutional acceptance.
Source: Public Information
ABAB AI Insight
Bitcoin's market value expansion has led to a decline in marginal capital efficiency, with large inflows having a diminished impact on prices, reflecting a transition from an early high-beta asset to a mature macro asset.
In terms of capital flow, institutional and ETF inflows are increasing, but larger-scale funds are needed to drive significant price increases. Ki Young Ju's viewpoint emphasizes that Bitcoin must integrate into the traditional macro framework to attract trillion-dollar allocations.
Similar to gold's evolution from a speculative to a reserve asset, or the reduction of beta in mature stock markets, Bitcoin is currently in a mid-stage of institutionalization, and the decline in capital efficiency is an inevitable result of scaling.
Essentially, this reflects asset maturation, where market cap expansion dilutes the impact of individual funds, concentrating capital towards deeper liquidity and macro-related assets, pushing Bitcoin from the margins into mainstream finance.
ABAB News · Law of Cognition
The more mature an asset, the lower the capital efficiency and the higher the degree of institutionalization.
Parabolic increases require exponential funding; scaling is a form of deleveraging.
Core macro assets absorbing trillions is the starting point for the next cycle.