Historically, October has proven to be a robust period for Bitcoin, earning the moniker “Uptober,” a title that holds this year as well.
The recent price surge of Bitcoin is believed to be fueled by optimism surrounding spot ETFs and an escalating demand for safe-haven assets.
The growing number of Bitcoin spot ETF applications has heightened the interest of whales and institutional investors. The surge in institutional activity witnessed recently may serve as a precursor to what lies ahead in 2024, hinting at a potentially transformative period for Bitcoin and the broader cryptocurrency landscape.
Bitcoin’s on-chain activity indicates an active presence of whales during the crypto’s recent ascent beyond $35,000. Whales are investors wielding significant capital and capable of impacting market dynamics.
- Data compiled by blockchain analytics firm IntoTheBlock reveals a surge in the number of transactions on the Bitcoin blockchain involving movements of at least $100,000 worth of BTC.
- This metric reached a year-to-date peak, recording 23,400 such transactions.
CME #Bitcoin open interest continues to reach new highs this year.
In fact, CME #Bitcoin open interest has exceeded most centralized exchanges, second only to Binance.
— CoinGlass (@coinglass_com) October 30, 2023
According to Coinglass data, the Chicago Mercantile Exchange (CME) has secured its position as the second-largest bitcoin futures exchange, with only Binance surpassing its market share.
- Notional open interest (OI), reflecting the value locked in active or open contracts, on CME has reached $3.54 billion, slightly trailing behind Binance’s $3.83 billion.
- Remarkably, open interest in CME’s cash-settled futures contracts has surpassed 100,000 BTC for the first time, propelling the exchange’s share in the BTC futures market to a record high of 25%.
- Many consider this rise of a regulated, mainstream financial exchange as an indication institutional participation is driving the recent crypto market rally.
Source: Deutsche Digital Assets
Recent blockchain data reveals a surge in activity among retail investors.
- Tracked by Deutsche Digital Assets, the on-chain activity index for small entities, serving as a metric to measure retail investor engagement, reached a new yearly peak of 1.5 last week.
- This uptick signals heightened participation from individual retail investors in the crypto space in recent weeks.
The available supply of Bitcoin for trading on cryptocurrency exchanges has reached its lowest point in half a decade.
- According to Glassnode data, the quantity of BTC available for buying and selling on crypto exchanges has dwindled to 2.3 million, marking the lowest level since April 2018 and declining from the 2.6 million recorded a year ago.
19,197 Bitcoin ($652M) has been withdrawn from Binance
— Whale (@WhaleChart) October 29, 2023
Furthermore, the Bitcoin count on centralized exchanges has plummeted to a multi-year low, with a meager 36,000 BTC surpassing the 2 million mark.
- Over the past 90 days, approximately 60,000 bitcoins, valued at just over $2 billion, have been withdrawn from trading platforms.
- This trend underscores a significant reduction in the available Bitcoin supply on exchanges.
Meanwhile, around 3 million Bitcoins have remained dormant for a decade:
- This figure is noteworthy compared to the current total supply of 19.5 million and Bitcoin’s maximum-ever supply of 21 million.
- The looming potential approval of a spot bitcoin ETF adds an intriguing dimension, setting the stage for a potential supply shock.
- Essentially, the active liquid Bitcoin available for trading in the market is relatively limited.
- A slight increase in demand has the potential to propel prices rapidly higher.
It’s essential to recognize that this dynamic operates in both directions, serving as a reminder that increased demand can swiftly drive prices upward- conversely, reduced demand may lead to rapid declines.
Per a Monday report from FalconX, citing Coin Metrics data, the crypto market’s depth in 2023 has hit an all-time low. The impending Bitcoin halving could potentially deepen these liquidity cycles.
Source: Delphi Digital
Additionally, according to data compiled by crypto research firm Delphi Digital, total trading volumes across centralized and decentralized exchanges in the spot market have reached multi-year lows.
Analysts often turn to the market capitalization of stablecoins as a metric to assess liquidity in the market, given their crucial role as on- and off-ramps for crypto traders. DeFiLlama indicates that the total market capitalization of stablecoins has been on a declining trend.
Additionally, the current reading on the Bitcoin Fear & Greed Index signals a state of Greed. As Warren Buffett wisely advised, it’s prudent for investors to “be fearful when others are greedy and to be greedy only when others are fearful.” Hence, exercising caution is best in the present market conditions.
As mentioned earlier, the upward momentum in the crypto market is primarily fueled by optimism surrounding the potential approval of a BTC spot ETF in the U.S. However, attention may shift to the Federal Reserve’s interest-rate decision. While a pause in rate changes appears likely, the crypto community views this as another pivotal moment in the ongoing thawing of the crypto winter.
Anticipation is high for the SEC’s expected approval of several spot-based ETFs early next year. Analysts projecting a financialization-driven boost to BTC’s market value, possibly reaching $42,000 and beyond.
Additionally, the increase in America’s military budget, driven by escalating global conflicts such as the one between Israel and Hamas, may lead to higher government borrowing.
In such circumstances, investors may turn to alternative assets like gold and, notably, Bitcoin if they doubt the safety of long-term U.S. Treasury bonds. This potential global wartime inflation could trigger a significant bull run. Bitcoin is ready for its fourth halving in April next year. Historical patterns suggest that reward halvings precede major bull runs.
While the journey may have its ups and downs, the overall trajectory for the industry appears upward. So, when the market undergoes corrections, it might be a strategic move to fatten your bags!
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