News On Bitcoin - Week 40 2024

Weekly update on all things Bitcoin

October 08, 2024

TL;DR

  • BTC is down

  • Bitcoin dominance is up

  • Metaplanet Grows BTC Holdings with $1.4M Strategy

  • Spot Bitcoin ETFs Face Largest Outflows Since September

  • Retail Investors Sell Bitcoin to ETFs

  • HBO Documentary Proposes Bitcoin Creator's Identity

  • Ohio's BTC & Crypto Tax Bill Proposal

  • Lutnick Champions Bitcoin as a Commodity

  • OCEAN Launches DATUM Protocol for Decentralized Mining

  • CleanSpark CEO Predicts Bitcoin Near $200K Peak

  • Hut 8 Settles $38M Loan to Focus on AI Growth

Bitcoin Price

Crypto is up this week, with BTC being down 5.3% and ETH down 10.2%:

Bitcoin dominance has increased over the week, rising from 53.9% to a low of 53.56% and ending at 54.6%. Investor sentiment, regulatory changes, technological advancements, and the overall growth of the cryptocurrency sector shape Bitcoin's market dominance. Its reputation as "digital gold" also enhances its position, making it a key player in the market.

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 regained the $62,000 level, rising 2.4% after retesting the $59,900 support on October 3.

This surge is driven by macroeconomic factors, including robust US employment data, Japan's potential economic stimulus, and heightened concerns over the US financial system.

Despite a historically inverse relationship between Bitcoin and the US Dollar Index (DXY), both assets are rising due to the "Milkshake Theory," which suggests that the US dollar is absorbing global liquidity.

Inflationary pressures from a 9% weekly surge in oil prices and expectations of further liquidity injections could benefit Bitcoin, though a "flight-to-quality" trend may favor cash and strong tech stocks.

Additionally, concerns are growing over the Federal Reserve's reliance on repurchase agreements, signaling limited room for adding liquidity.

Bitcoin (BTCUSD) Analysis:

Bitcoin closed at $60,968 on October 4, 2024, showing short-term weakness after breaking its rising trend, with support at $53,778 and resistance at $66,434. Medium-term, it remains slightly negative but could reverse as RSI indicates upward momentum. Long-term, Bitcoin remains in a rising trend, signaling optimism, though $70,000 resistance poses a challenge. The overall outlook is neutral with a "hold" recommendation.

Expected Trading Ranges: resistance level at $66,434 and support at $53,778.

Market Outlook

Bitcoin's market outlook is bearish in the short term due to a recent break below the rising trend channel and support at $61,400, indicating potential further declines. The medium-term outlook remains weak negative, influenced by low trading volumes at price peaks and economic concerns like rising oil prices.

However, the long-term perspective is neutral to positive, as Bitcoin stays within a rising trend channel, suggesting investor optimism if it can break the $70,000 resistance level. Overall, caution is advised due to current market volatility and macroeconomic factors.

BTC/ETH ratio has seen an increase:

From September 30 to October 5, 2024, the BTC to ETH conversion rate increased from 24.41 ETH per 1 BTC to 25.79 ETH, marking a rise of approximately 5.65%. This reflects a positive trend in Bitcoin's value relative to Ethereum, indicating growing strength for Bitcoin over this period.

"Remember all those that told you ‘September is bearish for Bitcoin."

Financial News

Japan’s Metaplanet Inc. earned 23.972 BTC ($1.46 million) by selling bitcoin put options, increasing its total holdings to 530.717 BTC. The firm sold 223 put options with a $62,000 strike price, set to mature on December 27, 2024. If bitcoin's price drops below the strike price, Metaplanet will buy more bitcoin, further boosting its reserves.

CEO Simon Gerovich highlighted the strategy as a way to capitalize on bitcoin’s volatility, generating additional returns while maintaining significant pure bitcoin holdings. The company has been on a bitcoin buying spree, securing additional holdings to strengthen its financial position.

U.S. spot bitcoin ETFs saw $242.53 million in net outflows on Tuesday, the largest since early September, ending an eight-day streak of positive inflows. Fidelity’s FBTC led the outflows with $144.67 million, followed by Ark and 21Shares' ARKB at $84.35 million, and Bitwise’s BITB at $32.7 million. BlackRock's IBIT was the only ETF to record positive inflows, with $40.84 million. Total trading volume for spot bitcoin ETFs reached $2.53 billion.

Spot Ether ETFs also experienced significant outflows, totaling $48.52 million. The Grayscale Ethereum Trust led with $26.64 million in outflows, while Fidelity’s FETH saw its largest-ever daily outflows at $24.97 million.

U.S. spot Bitcoin ETFs have accumulated 312,488 BTC since their approval nine months ago, vastly outpacing the 169,942 BTC created by miners. These ETFs, including BlackRock's, have seen consistent inflows, with institutions, pension funds, and wealthy investors pouring in. Despite this, smaller Bitcoin holders are selling their BTC to these ETFs, missing out on long-term wealth-building potential.

Many of these coins are being locked in ETFs, where investors only redeem for US dollars, losing the key benefits of Bitcoin’s decentralized nature. Holding BTC long-term remains one of the best strategies for building wealth in a sovereign way.

Adoption News

HBO’s upcoming documentary "Money Electric: The Bitcoin Mystery," set to release on October 9, claims to reveal the identity of Bitcoin’s mysterious creator, Satoshi Nakamoto. Directed by Cullen Hoback, the film suggests that Len Sassaman, a prominent cypherpunk who passed away in 2011, could be Nakamoto, as noted by Galaxy Digital’s Head of Research.

While this new theory is expected to reignite debate within the crypto community, the documentary’s conclusion is unlikely to settle the matter. Given the many individuals who have been speculated to be Nakamoto over the years, the true identity may remain unsolved.

Ohio State Senator Niraj Antani has introduced a bill to mandate the acceptance of Bitcoin and other cryptocurrencies for state and local tax payments. This legislation aims to normalize cryptocurrency usage within Ohio’s financial framework, positioning the state among the few to adopt such measures.

Antani emphasized that cryptocurrency represents the present and future of the economy, drawing on Ohio’s past attempt in 2018 to allow Bitcoin tax payments, which failed due to regulatory hurdles. The new bill seeks to enable state universities and pension funds to invest in cryptocurrencies, marking a significant step toward broader crypto engagement in Ohio.

Howard Lutnick, CEO of Cantor Fitzgerald, argues that bitcoin should be recognized as a commodity like gold and oil due to its finite supply and decentralized nature. In a Fox Business interview, he criticized regulators for misunderstanding crypto, asserting, "Bitcoin is a commodity."

Lutnick highlighted bitcoin's role as a store of value, especially in economic uncertainty, and compared its trading dynamics to traditional commodities. Cantor Fitzgerald's recent $2 billion bitcoin lending program further underscores institutional interest, as Lutnick envisions a future convergence of commodities and equities, positioning bitcoin as a significant asset in the financial landscape.

Mining News

OCEAN has unveiled the DATUM protocol (Decentralized Alternative Templates for Universal Mining), aimed at decentralizing Bitcoin mining by granting individual miners control over block creation. This move addresses concerns about the over-centralization of mining pools, which currently dominate more than 50% of Bitcoin's hashrate.

By enabling miners to construct their own block templates while still participating in mining pools for consistent rewards, DATUM aligns with Bitcoin’s foundational vision. Supported by industry leaders like Jack Dorsey, this initiative not only enhances network security but also promotes a more resilient and decentralized Bitcoin ecosystem. A public beta is expected on October 18.

In a recent interview with Bernstein, CleanSpark CEO Zach Bradford forecasted that Bitcoin could peak just below $200,000 within the next 18 months. He noted that Bitcoin's prolonged flat period could extend its upward momentum, while historical trends suggest positive price movements post-halving and during capital shifts linked to election cycles.

Bradford emphasized the advantages of pure-play Bitcoin miners, asserting they are undervalued compared to AI-diversifying competitors. He pointed to CleanSpark’s efficient operations and strategic selling approach, which has resulted in holding 97% of mined Bitcoin since June 2023. Bradford also highlighted the need for advanced cooling technologies as mining equipment evolves.

Hut 8 has successfully repaid its $38 million loan from Anchorage Digital by converting the debt into common stock at a 51% premium, priced at $16.395 per share. This strategic move follows a previous restructuring where 21,000 mining machines were used as collateral. With approximately $290 million in remaining debt, including a $150 million convertible note aimed at AI expansion, Hut 8 is positioning itself for growth.

CEO Asher Genoot expressed optimism about leveraging a stronger balance sheet to explore partnerships for next-generation mining and AI data centers. The company recently launched a GPU-as-a-service program with AdvizeX, marking a significant shift towards high-performance computing amidst rising Bitcoin network challenges.

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