Crypto Weekly Digest | Bitcoin nears all-time high on "16th birthday". How will multiple catalysts drive November's market?

Last Thursday, October 31st, marked 16 years since Satoshi Nakamoto published the Bitcoin whitepaper, "Bitcoin: A Peer-to-Peer Electronic Cash System," on the P2P Foundation website. Trump also sent his "birthday wishes" on X.

Last Wednesday, IBIT saw an inflow of $872 million, setting a new record for single-day capital inflow. According to BlackRock's official update on spot Bitcoin ETF holdings as of October 31, IBIT held 429,185 bitcoins as of October 30, exceeding 2% of the total Bitcoin supply. The market value of its holdings surpassed $30 billion, reaching an all-time high. Currently, spot Bitcoin ETF issuers collectively hold nearly one million bitcoins. Bloomberg also predicts: Before the end of the year, institutional holdings will surpass the number of bitcoins held by Bitcoin's founder, Satoshi Nakamoto.

On October 31st, according to CoinShares' newly released Q3 mining report, Bitcoin mining costs have risen to record levels. Considering only cash expenditures, the production cost per BTC has reached approximately $49,500. When including additional expenses such as depreciation and stock-based compensation, the average cost soars to $96,100. Bitcoin's total network hash rate briefly surpassed 800 EH/s, touching 803.75 EH/s, setting a new all-time high. Currently, the network's average hash rate over the past seven days is around 750 EH/s.

CoinShares researcher James Butterfill points out that high costs still cannot prevent miners and mining companies from expanding infrastructure and making further investments. Diversifying income sources may be another way out.

The total Bitcoin contract open interest has hit a new historical high across all exchanges. According to data as of October 31, the figure has surpassed $43.3 billion.

The SEC has officially accepted the application to convert the "Digital Large Cap Fund" (Grayscale Digital Large Cap Fund, ticker symbol GDLC) into an ETF and is now seeking broader public comment. The mixed fund includes cryptocurrencies such as Bitcoin, Ethereum, Solana, XRP, and Avalanche.

On November 1, according to a report by The Block, Florida's Chief Financial Officer Jimmy Patronis stated in a CNBC interview last Thursday (U.S. time) that the state holds approximately $800 million in "crypto-related" investments. Earlier this week, the state financial officer proposed investing a portion of the state's retirement system funds into cryptocurrencies.

According to Bloomberg, MicroStrategy has outperformed almost all U.S. stocks over the past two years, including AI chip giant Nvidia.

Analysts are now divided on whether MicroStrategy's stock price premium of more than twice its underlying net asset value is too high, especially given the company's declining revenue and limited cash flow.

Institutional investor trading volume was $15.1 billion, accounting for 81.6% of total trading volume, maintaining a dominant position.

Retail investor trading volume was $3.4 billion, accounting for 18.4%.

Looking at the crypto asset trading structure:

– Bitcoin's trading share rose to 37%, up 2% from the previous quarter.

– Ethereum maintained a 15% level.

– USDT trading share rebounded from 10% to 15%.

– Solana's proportion in trading revenue reached 11%, indicating the increasing importance of emerging public chains.

– Other crypto assets' share decreased to 33%.

Since the company filed for an IPO in February, it has been describing these assets as "immaterial." From the unaudited financial statements, it can be seen that the proceeds from the sale of digital assets were approximately $6.869 million.

On November 1, according to the Q3 performance report released by stablecoin issuer Tether, the company's net profit for Q3 was $2.5 billion. About half of this profit came from earnings on U.S. Treasury holdings, while the remaining portion was from unrealized appreciation of gold held in the company's reserves. The financial report shows that the company's direct and indirect exposure to Treasury bills (including holdings in money market funds and reverse repurchase agreements) exceeded $100 billion. The reserve assets include approximately $5 billion worth of gold and $4.8 billion in Bitcoin.

Highlights: Tether's stablecoin issuance reached a new high with a circulation of nearly $120 billion — USDT issuance has grown by 30% so far in 2024, an increase of about 27.8 billion tokens. As of the end of Q3, Tether's asset reserves stood at $125.5 billion, with liabilities of $119.4 billion. The excess reserves backing Tether stablecoins exceeded $6 billion.

Geoff Kendrick, Head of Global Digital Asset Research at Standard Chartered, states that Bitcoin price volatility will continue to intensify before the election. As BTC contract open interest reached a historical high this week, traders tend to close their positions before the election. These trades could act as "amplifiers" for a potential pullback.

Joshua Lim, CEO of Arbelos Markets, states that there are currently a large number of derivative bets predicting BTC will soar above $85,000 by the end of November, following the election.

Matrixport reports that the downward channel has been broken through in the past two weeks. They are focusing on catalysts: the election and net inflows into ETFs.

On October 28, CoinDesk market analyst Omkar Godbole noted that BTC has risen nearly 60% year-to-date. However, most of this growth was concentrated in Q1, and since then, the bulls have been unable to establish new support levels above the $70,000 mark.

The copper/gold ratio has been declining since May, signaling a risk-off sentiment. This downward trend accelerated in July, foreshadowing a brief period of risk aversion in August, during which BTC fell from $65,000 to $50,000. Moreover, BTC's best years—2013, 2016-17, and 2020-21—all coincided with upward trends in the copper-to-gold ratio. The decline in the copper/gold ratio since the second half of this year has once again raised questions about Bitcoin reaching new all-time highs.

Note: The copper-gold ratio is the ratio between copper prices and gold prices, used as an indicator to observe economic cycles and market risk appetite.

On October 28, Cathie Wood, CEO of Ark Invest, stated: "The greater the uncertainty and volatility in the global economy, the more confidence I have in Bitcoin." The assets under management of ARKB, Ark Invest's Bitcoin spot ETF, have already exceeded $3.6 billion.

On October 31, in a report released last Wednesday, a team of analysts led by Nikolaos Panigirtzoglou from JPMorgan stated that Trump's entry into the White House would further solidify Bitcoin's strength. This is attributed to what they call a "debasement trade" among retail investors (referring to profitable trades in the context of fiat currency devaluation).

The analysts also noted: "Meme coins and AI tokens would also be favored by retail investors."

John Plassard, an analyst at wealth management firm Mirabaud Group, stated: "The relaxed regulatory approach towards the crypto industry under Trump's administration could attract more investment and innovation. However, this might also lead to an increased risk of fraud and greater exposure to risks for retail investors."

Analysts at 10X Research predict that BTC could reach $100,000 by early next year, with inflows from stablecoins and institutional ETFs serving as driving factors. Another factor is the "Bitcoin Black Hole Effect": as more tokens are issued, Bitcoin's dominance becomes increasingly prominent, with funds gradually being drawn away from other tokens.

According to Cointelegraph, despite Bitcoin's price rising to near all-time highs last Wednesday, Google searches for "Bitcoin" are still far behind "AI" in terms of traffic. Google Trends data shows that the search interest index for "Bitcoin" is only 23 (out of 100) compared to its historical peak in late May 2021.

Historical data indicates that when retail interest peaks during bull markets, Coinbase often rises to the top 50 in the App Store rankings. However, according to current Sensor Tower data, the Coinbase app now ranks 308th. Nevertheless, Coinbase still jumped 167 places during the surge on October 28 and 29 — suggesting that rising cryptocurrency prices are gradually attracting retail investors. CryptoQuant points out that while retail investors are slowly returning, the activity of large Bitcoin investors this year has made this return seem "insignificant" in comparison.

In the short term, Trump-related trades in this week's U.S. election and the Federal Reserve's monetary policy direction are two major catalysts for Bitcoin's price. Large-scale contract liquidations before and after the election may amplify price volatility.

In the long term, as Bitcoin gradually becomes a mainstream allocation asset for asset management institutions, and as Bitcoin and other cryptocurrency derivative products (spot & futures ETFs, ETF options) are perfected on centralized exchanges, institutional demand will provide price support and liquidity guarantees. Bitcoin's dominant market position remains solid, with no current trend of Bitcoin funds flowing into altcoins.

At present, the interweaving of short-term and long-term positive factors is expected to catalyze a new round of upward momentum for Bitcoin.

As of November 1st data:

The total net inflow of U.S. Bitcoin Spot ETFs is $2.2202 billion, including:

IBIT saw a net inflow of $2.1489 billion last week;

FBTC saw a net inflow of $89.8 million last week;

GBTC saw a net outflow of $53.9 million last week;

BITB saw a net outflow of $12.3 million last week;

ARKB saw a net outflow of $38.9 million last week.

As of November 1st data:

The total net inflow of U.S. Ethereum Spot ETFs is $13 million, including:

ETHA saw a net inflow of $65.5 million last week;

ETHE saw a net outflow of $62.4 million last week.

On November 1, according to Lookonchain monitoring, after BTC's sharp drop on Friday, a whale increased their holdings by 550 BTC ($38.68 million).

On November 1, monitoring revealed that an address has accumulated 11,658 BTC since March 14 of this year at an average cost of $66,953. This holding is worth approximately $780 million, with an unrealized profit of over $42.3 million.