Bitcoin Market Report
Bitcoin Magazine Pro published a review of Bitcoin in October, discussing some key topics including the decline in Bitcoin's exchange balances, ETF inflows exceeding $5 billion, and optimistic forecasts that could redefine Bitcoin's value in the coming quarter. Below are the report details.
Key Highlights:
On-chain analysis of Bitcoin: Exchange balances are at historic lows, indicating growing confidence among holders, with more choosing self-custody.
Surge in Bitcoin ETFs: Inflows of over $5.4 billion in October, with BlackRock's IBIT leading the market. This reflects the increasing acceptance of Bitcoin in mainstream financial markets.
Mining Dynamics: Russia and China are expanding their mining influence, while the U.S. still retains the largest share of hash power.
Bullish Price Forecast: Bitcoin analyst Tone Vays predicts a potential price range of $102,000 to $140,000 by mid-2025, supported by strong technical indicators.
Bitcoin On-chain
Highlights
BTC exchange balances have hit a new low, indicating a rising preference for self-custody.
Addresses with balances over 100 coins have reached a historic high, reflecting the expansion of adoption.
Strong on-chain fundamentals indicate that price momentum will persist into 2025.
Forecast
The decrease in exchange balances of Bitcoin and the continuous rise in wallet adoption indicate potential for price increases. Investors should focus on exchange inflows and the growth of high-balance wallets as indicators of demand and potential price strength for Q4 and beyond.
Insights
In October, the total balance of Bitcoin on exchanges significantly decreased, currently slightly below 3 million, as shown in Figure 1. This decline indicates that investors are increasingly choosing self-custody over leaving funds on exchanges, a trend typically associated with long-term holding strategies.
When exchange balances decrease and prices rise, it indicates confidence in the medium to long-term trend of Bitcoin. This shift towards self-custody may become a constraint on supply and could create upward pressure on prices if demand continues.
Mining
Highlights
Russia and China currently contribute significantly to global Bitcoin hash power.
The U.S. still leads in hash power, but Russia ranks second, while despite the mining ban, China's activities are quietly increasing.
Emerging markets such as Ethiopia and Argentina are also showing growth, which could affect hash power distribution.
Forecast
If the hash power of China and Russia continues to grow, U.S. miners may face new global competition next year.
Insights
Recently, Russia and China are becoming key players in the global Bitcoin mining arena. Russia is now the second-largest contributor to global hash power.
Its utilization of rich natural resources allows miners to access cost-effective energy. This expansion is driven by the region's support for mining as a profitable strategic economic activity.
Meanwhile, despite China's official ban, underground mining continues, with increased underground mining activities in China in recent years.
This dual development suggests a shift in mining power, which could affect market dynamics, especially if global hash power distribution is no longer dominated by the U.S.
While the U.S. still leads in Bitcoin hash power, Russia's rapid rise and China's resilience pose challenges for American miners, with emerging markets like Ethiopia and Argentina also ramping up mining activities, creating a more decentralized global mining network.
This diversification may enhance the security and operational stability of the Bitcoin network, making it less susceptible to regional disruptions.
As these trends continue, Bitcoin miners in the U.S. may face intensified competition, whether in acquiring energy resources or maintaining profitability under volatile market conditions.
ETFs
Highlights
BlackRock's BTC ETF (IBIT) saw a maximum daily inflow of $872 million, with a net trading volume of $4.6 billion for the month.
Fidelity's maximum daily inflow was $239 million, but its net trading volume of only $496.8 million pales in comparison to IBIT.
Bitwise (BITB) had a maximum daily inflow of $100.2 million, with a monthly net trading volume of $137.3 million.
Forecast
BTC ETFs are expected to experience volatility in the short term. While IBIT remains the leader in trading volume and liquidity, it may not provide the best trading volatility. The relative scale of FBTC and ARKB has shown significant volatility, providing the best trading opportunities.
Insights
In October, Bitcoin ETF net inflows reached a record approximately $5.415 billion (Figure 1).
The popularity and demand for these products have prompted the U.S. SEC to further approve options trading on many BTC ETF products.
Increased speculation, leverage, margin calls, market maker delta hedging, and sentiment effects may impact BTC ETFs, which will have ongoing effects on the direct Bitcoin spot market itself.
BlackRock's IBIT is far ahead with a monthly trading volume of $4.6 billion, with the most active trading.
For traders looking to act based on market dynamics, this also means that for every trade, if it's IBIT, there will be someone willing to take it.
Other ETF options, such as Fidelity's FBTC, Ark 21Shares' ARKB, and Bitwise's BlTB, could provide better entry opportunities as trading volumes for each option have decreased (Figure 2).
While ETFs strive to perfectly track BTC market prices, lower liquidity and trading volumes can create opportunities to enter favorable positions during these imbalances.
Stocks
Highlights
MicroStrategy (MSTR) announced a three-year, $42 billion Bitcoin investment plan aimed at increasing its Bitcoin holdings on its balance sheet.
Despite Bitcoin's 63.9% rise year-to-date, six out of the top ten Bitcoin-related stocks have underperformed (negative returns).
Metaplanet INC (TYO: 3350) has risen 838.82% year-to-date, primarily due to announcing its adoption of a Bitcoin balance sheet strategy.
Forecast
Driven by the positive sentiment around Bitcoin in early Q4, Bitcoin-related stocks may rise in the coming months. Stocks like Semler Scientific (SMLR) may have opportunities as they quietly incorporate Bitcoin into their balance sheets, providing positive upward momentum for the stock's value.
Insights
Intuitively, Bitcoin-related stocks should follow BTC's bullish trend, but most have not benefited from Bitcoin's 63.9% rise year-to-date (YTD).
Marathon Digital (MARA), Riot Platforms (RIOT), and CleanSpark (CLSK) have fallen -31.42%, -38.98%, and -6.39% year-to-date, indicating operational difficulties or sensitivity to crypto mining costs. Tesla (TSLA) has risen only 0.2% since early 2024, while Block Inc. (SQ) has dropped 6.72%.
While Coinbase (COIN) and Galaxy Digital Holdings (GLXY or BRPH) perform actively, their performance has not outpaced the spot Bitcoin price movement.
In contrast, MicroStrategy (MSTR) surged 263.68%, reflecting the impact of its leveraged Bitcoin holdings and investor confidence in its Bitcoin-focused strategy.
MicroStrategy Executive Chairman Michael Saylor announced a three-year, $42 billion Bitcoin investment plan, continuing the company's buy-and-hold strategy (Figure 2).
In Japan, Metaplanet Inc. (TYO: 3350) has grown 838.82% year-to-date since announcing its Bitcoin reserve strategy earlier this year.
With Bitcoin at the brink of the next bull market, companies should consider adopting a Bitcoin holding strategy.
Derivatives
Highlights
Bitcoin recently broke through $70,000, with short positions liquidated exceeding $100 million.
Funding rates remain relatively neutral, possibly due to the uncertainty of the U.S. elections.
At this stage of the market cycle, funding rates are very low. This is bullish as it will allow BTC prices to rise further without accumulating excessive leverage in the derivatives market.
Forecast
Once the uncertainty surrounding the U.S. elections and subsequent market volatility pass, Bitcoin is expected to rise before the end of the year.
Insights
In the past month, BTC has been trending upwards. While there were downward corrections along the way, most liquidations targeted traders attempting to short BTC.
The U.S. elections bring short-term uncertainty to the Bitcoin derivatives market. Significant market volatility is expected in the coming weeks.
However, once any directional impulse reaction subsides, the derivatives market is expected to stabilize again.
Currently, at this stage of the Bitcoin market cycle, funding rates remain very low. This is bullish and should allow Bitcoin prices to rise significantly in the coming months until we see funding rates at +0.06. By then, caution may be necessary, but we are still far from those levels.
Adoption
Highlights
MicroStrategy (MSTR) announced a $42 billion capital plan, which includes a $21 billion ATM stock issuance to purchase Bitcoin.
Metaplanet (3350.T) holds over 1,000 BTC, making it the largest publicly traded Bitcoin holder in Asia.
Microsoft (MSFT) will hold a shareholder meeting in December to vote on a potential Bitcoin financial strategy.
Forecast
MicroStrategy (MSTR) decided to use Bitcoin as a financial reserve, benefiting shareholders and driving the adoption of Bitcoin among publicly traded companies.
Since January, companies such as Metaplanet (Asia's largest publicly traded Bitcoin holder, holding over 1,000 BTC), Semler Scientific, and Samara Asset Group have been following suit. This trend could influence Microsoft (MSFT) shareholders to vote on a similar strategy in December.
Insights
MicroStrategy plans to issue $21 billion of Class A common stock over the next three years to purchase Bitcoin. Michael Saylor's $42 billion capital plan includes a $21 billion stock issuance aimed at raising $21 billion in fixed income securities to fund Bitcoin purchases.
Inspired by MicroStrategy's success, Japan's Metaplanet adopted a Bitcoin reserve strategy this spring, currently holding over 1,000 BTC, becoming Asia's largest publicly traded Bitcoin holder. Due to Bitcoin's deflationary nature and an average annual return of 40%, it has become a preferred reserve asset to hedge excess cash, with even large tech companies starting to follow suit: Microsoft shareholders will vote in December on whether to adopt Bitcoin as a reserve asset.
Although management indicated 'rejection', strong shareholder interest may change the decision, potentially triggering broader adoption of Bitcoin among publicly listed companies.
Regulation
Focus
SEC Approves Bitcoin ETF Options: An important step towards mainstream financial product integration.
Pennsylvania's Bitcoin Rights Bill: A milestone in protecting Bitcoin self-custody and payment rights.
Thailand Proposes Entry for Crypto Funds: Asian Crypto Adoption Rates May Rise
Forecast
Recent regulatory developments, especially the approval of Bitcoin ETF options and proactive legislative movements in the U.S., may significantly enhance investor confidence. This could lead to a surge in Bitcoin prices, particularly if these initiatives are seen as paving the way for more mainstream financial integration.
In addition, regulatory dynamics from key markets such as the U.S. should be monitored, as political changes in the U.S. may impact regulatory approaches, while countries like those in Asia are opening up to crypto funds, which could influence regional and global market sentiment.
Insights
October is a critical moment for Bitcoin's regulatory landscape, as the SEC's approval of Bitcoin ETF options trading demonstrates the increasing acceptance of cryptocurrencies by traditional finance.
This development not only provides investors with additional hedging and speculative tools but may also enhance Bitcoin's liquidity and price stability in the long run.
Pennsylvania recently passed legislation recognizing Bitcoin's self-custody and payment rights, which may influence other U.S. states.
This could create a more Bitcoin-friendly environment, reducing concerns about strict regulation and fostering an atmosphere conducive to investment.
The Asian market, especially Thailand's initiative to allow private funds to invest in cryptocurrencies, suggests widespread acceptance of cryptocurrencies in one of the world's largest economic regions, potentially driving trends in neighboring countries.
Macroeconomic Outlook
Highlights
The continuous rise in U.S. federal debt highlights the limitations of fiat currency, driving interest in Bitcoin.
The persistent inflation shown by CPI enhances Bitcoin's appeal as a hedge. Amid concerns about the long-term stability of the dollar, institutional investors are increasingly considering Bitcoin.
Forecast
Bitcoin is expected to continue its upward trend, driven by increasing concerns over federal debt and inflation. Monitoring CPI and federal debt levels can provide early indicators for Bitcoin's potential appreciation in the coming months.
Insights
In a high debt, inflationary market environment, Bitcoin's value proposition is clearer than ever.
The first chart below shows the relationship between federal debt and Bitcoin prices. As federal debt rises to unprecedented levels, the sustainability of the dollar as a store of value is increasingly questioned.
Investors, especially institutional investors, are seeking alternatives that are not affected by currency depreciation. Bitcoin's limited supply can effectively hedge against the risks posed by excessive debt accumulation and currency devaluation.
The second chart below shows the rising inflation relative to Bitcoin as indicated by the Consumer Price Index (CPI), with high inflation rates persisting even when excluding volatile categories such as food and energy.
This solidifies Bitcoin's position as a long-term store of value, maintaining purchasing power during periods of economic uncertainty. With inflation showing no signs of abating and federal debt continuously ballooning, Bitcoin holds a unique position as a strategic asset for preserving value and hedging against economic instability.
Price Forecast
Focus
Price trends are about to close at historic highs on daily, weekly, and monthly charts, which is very bullish across all these timeframes.
In Bitcoin's history, the MRL has only closed with a green star on the two-month histogram for the seventh time. In all previous six instances, this led to an increase of over 100% in the following year.
Cup-and-handle pattern and Fibonacci extensions provide additional bullish price targets in the $100,000 to $105,000 range.
Forecast
The current biggest concern is 'groupthink,' with everyone expecting prices to exceed $100,000.
Personally, I have not seen anything concerning in the TA charts, on-chain analysis, four-year halving cycle analysis, mining industry, or any regulatory setbacks.
Many people are buying Bitcoin, hoping that under Trump's administration, Bitcoin will gain greater regulatory recognition.
Insights
Bitcoin is poised for a potential bull market, with technical indicators pointing to three price targets.
The Tone Vays MRL indicator on the two-month chart shows an increase of at least 100% over the past six months, suggesting a peak around $140,000 or higher by the second quarter of 2025. This pattern is consistent with significant rebounds in 2017 and 2021.
Additionally, the cup-and-handle patterns on weekly and monthly charts point to a target of $105,000, typically achieved within 4-6 months based on historical trends.
Finally, Fibonacci extensions show an initial target of $102,000, with potential to reach higher levels of $155,000 and $210,000 if previous cycles repeat.
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