News On Bitcoin - Week 33 2024

Weekly update on all things Bitcoin

August 20, 2024

TL;DR

  • BTC is down

  • Bitcoin dominance is up

  • S. Korea Pension Fund Buys $34m MicroStrategy Shares

  • Goldman Sachs’ $418M Bet on Bitcoin ETFs

  • Rising Institutional Inflows into Bitcoin ETFs

  • Over 1 Million Bitcoin Addresses Hold 1 BTC

  • SEC Approves Leveraged MicroStrategy ETF

  • Norway and Switzerland Central Banks Invest in MicroStrategy

  • Miner Capitulation Hints at Bitcoin Bottom

  • Marathon Digital Labels Bitcoin as 'Made in USA'

  • Marathon Digital Eyes $250M to Expand Bitcoin Reserves

Bitcoin Price

Crypto is down this week, with BTC being down 4.3% and ETH down 2.1%:

Bitcoin dominance has increased over the week, rising from 54.3% to a peak of 54.59% and ending at 53.8%. Bitcoin dominance is up due to strong bullish momentum, significant short position liquidations, successful breakouts above key levels, positive market sentiment, and ongoing institutional interest.

It’s going to be interesting to see whether this trend will continue in the short term, as capital in crypto tends to flow initially to BTC and then further out on the risk-curve, starting with altcoins like ETH and then into mid- or low-cap coins.

Bitcoin has been stuck in a narrow range between $58,000 and $62,000 since August 8, unable to break free. While the S&P 500 and gold are nearing record highs, Bitcoin remains 19.5% below its March peak.

The cryptocurrency's lackluster performance is exacerbated by political uncertainties and strong economic data, which have dampened its appeal.

Additionally, decreased demand for leveraged futures and stablecoins, with USDT recently trading at a 0.2% discount in China, signals waning investor confidence, making Bitcoin’s recovery to previous highs a challenging prospect.

Bitcoin (BTCUSD) Analysis:

As of August 16, 2024, Bitcoin (BTC) is at $57,866.00, showing weak short-term performance within a falling trend channel. Immediate support is at $55,200, resistance at $61,400, and a potential short-term reversal is indicated by the RSI.

The medium-term trend is neutral, with support at $53,893 and resistance at $68,886. Long-term, Bitcoin remains positive with support at $45,000 and resistance at $70,000. Increased volatility and liquidity concerns suggest caution.

Expected Trading Ranges: Bitcoin (BTC): Support: $55,000 Resistance: $70,000

Market Outlook

Bitcoin (BTC), the short-term outlook is weak with support at $55,200 and resistance at $61,400, while the medium term shows uncertainty within a horizontal channel.

Long-term, Bitcoin remains positive with support at $45,000 and resistance at $70,000, though increased volatility and liquidity concerns warrant caution.

For Bitcoin to break out of its current range, increased buying pressure and a clear shift in spot demand are essential. A successful rally would require overcoming resistance levels and demonstrating stronger momentum.

Conversely, failure to hold key support levels could lead to further declines, emphasizing the importance of monitoring these critical price points.

BTC/ETH ratio has seen a decrease:

In the past 7 days, the BTC to ETH conversion rate has experienced a general decrease. The rate has fallen from 23.37 ETH on August 10 to 22.31 ETH on August 16, marking a decline of approximately 4.5%. The rate saw some fluctuations within this period, with notable decreases on August 12 and August 14, and minor recoveries in between. Overall, the trend reflects a gradual decrease in Bitcoin's value relative to Ethereum over the past week.

“The conversations around Bitcoin as a reserve asset have begun. The preconception of what is a ‘safe asset’ and what is ‘volatile’ will be shattered in the coming months." 

Financial News

South Korea’s National Pension Service (NPS) invested $34 million in MicroStrategy shares, acquiring around 245,000 shares after the recent 10-for-1 stock split. This investment offers the NPS indirect exposure to Bitcoin, given MicroStrategy’s 226,500 BTC holdings. As the largest institutional investor in South Korea, with $777 billion in assets, the NPS joins other major global funds like Norway’s central bank and the Swiss National Bank.

MicroStrategy’s stock has nearly doubled this year as more institutions adopt it as a Bitcoin proxy. The company’s leveraged Bitcoin strategy, coupled with growing institutional interest, highlights Bitcoin’s emergence as a key treasury asset.

Goldman Sachs has revealed a $418.65 million investment across several U.S. spot Bitcoin ETFs. Their holdings include $238.6 million in BlackRock’s iShares Bitcoin Trust, $79.5 million in Fidelity’s FBTC, and $56.1 million in Invesco Galaxy’s Bitcoin ETF, along with smaller stakes in other funds. This diverse approach positions Goldman as the third-largest holder of IBIT.

Mathew McDermott, Goldman’s head of digital assets, called Bitcoin ETFs a “big psychological turning point.” The bank’s move coincides with Bitcoin’s recent recovery, trading at $60,890, marking a 7% weekly gain.

Coinbase’s latest report reveals a significant uptick in institutional inflows into U.S. spot Bitcoin ETFs during Q2 2024, with holdings increasing from 21.4% to 24%. The investment advisor segment saw notable growth, now holding 36.6% of ETF shares, driven by major players like Goldman Sachs and Morgan Stanley.

Despite Bitcoin’s price drop, net inflows into spot ETFs reached $2.4 billion, reflecting sustained interest. Coinbase anticipates further growth as more advisory firms complete their due diligence, though short-term inflows may be moderated by seasonal factors and market volatility.

Adoption News

Over 1 million Bitcoin addresses now hold at least 1 BTC, indicating robust adoption. According to Bitcoin Magazine Pro, 1,012,650 addresses meet this threshold, removing a substantial portion of the 21 million total BTC from circulation. This trend highlights growing long-term confidence in Bitcoin, especially as institutions like MicroStrategy and U.S. Bitcoin ETFs collectively hold massive amounts of BTC.

The rapid increase in these addresses over the past two years reflects both retail and institutional accumulation. With only 21 million BTC available and 19 million already mined, the demand for securing Bitcoin’s limited supply continues to rise.

The SEC has approved the MSTX ETF, the first leveraged single-stock ETF targeting MicroStrategy. Issued by Defiance ETFs, MSTX offers 175% of MicroStrategy’s daily returns, amplifying exposure to Bitcoin due to the company’s substantial holdings of 226,500 BTC.

This leveraged ETF allows investors to gain enhanced access to Bitcoin’s market moves within an ETF structure. However, it carries heightened risks due to leverage and its concentration on a single stock. As the first ETF of its kind, MSTX’s success hinges on investor demand and MicroStrategy’s continued role as a Bitcoin proxy.

The central banks of Norway and Switzerland have made significant investments in MicroStrategy, indirectly gaining exposure to Bitcoin. Norges Bank now holds 1.578 million shares, while the Swiss National Bank increased its stake by 60% to 466,000 shares.

This move highlights a shift in traditional financial institutions’ stance on Bitcoin, as MicroStrategy’s large BTC reserves offer indirect access to the digital asset. Analysts suggest these investments could reflect either strategic diversification into Bitcoin or confidence in MicroStrategy’s growth, signaling the growing acceptance of Bitcoin-related assets within traditional financial systems.

Mining News

Bitcoin miners have ramped up their network hashrate to a record 627 exahash per second, despite recent price drops and tightening profit margins. This increase follows a miner capitulation event on August 5, when outflows spiked to 19,000 BTC as prices hit $49,000, marking the highest outflow since March. Miners sold to cover costs as margins shrank to 25%.

Historically, miner capitulations have aligned with local Bitcoin price bottoms, as seen in early 2023. The renewed hashrate expansion indicates positive miner sentiment, suggesting a possible price rebound as BTC hovers above $61,000.

Marathon Digital Holdings now stamps all Bitcoin blocks mined in the U.S. with a "Made in USA" label, showcasing their commitment to American production. CEO Fred Thiel emphasized that Marathon is the only large-scale miner capable of this, as it operates its own pool, ensuring all blocks are U.S.-mined.

This move aligns with comments by Donald Trump supporting domestic Bitcoin mining for energy dominance. Additionally, Marathon announced a $250 million private offering of convertible notes to purchase more Bitcoin, echoing MicroStrategy's strategy of corporate accumulation, further solidifying its role in the American Bitcoin landscape.

Marathon Digital Holdings plans to raise $250 million through convertible senior notes to increase its Bitcoin reserves and bolster its market position. The notes, maturing in 2031, will be offered to institutional buyers with proceeds directed toward acquiring Bitcoin and supporting corporate growth.

CEO Fred Thiel reaffirmed the company’s "full hodl" strategy, emphasizing Marathon’s confidence in Bitcoin’s long-term value. With over 20,800 BTC in reserves, Marathon aims to secure future gains despite short-term market reactions. This mirrors MicroStrategy’s approach, positioning Bitcoin as a key strategic asset amid industry challenges and institutional accumulation trends.

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