Opening bell │ #34 │ 6th November

Report highlights:

In recent analysis, we explore ETF Bitcoin holdings approaching 1 million BTC by U.S. election time, the muted ETH outlook despite high staking volumes, and record-breaking Bitcoin trading volumes that outpace previous years. We also take note on how Trump’s promise to maintain the U.S. dollar’s reserve currency status impacts crypto, particularly amid high inflation and rising interest rates. These macroeconomic factors are crucial to understanding potential crypto market shifts as we move closer to the 2025 inauguration.

Bitcoin markets 

Bitcoin eyes $100,000 around US president inauguration?

In October, this research team accurately estimated that ETFs “could hold just under 1 million Bitcoins” under management by the U.S. elections. Currently, ETFs hold 986k BTC, down from 996k at the start of November  (See OB#30). In our July edition, we also back-tested the ETF accumulation trend against potential price ranges, suggesting a $100,000 Bitcoin is quite possible by the time the 47th U.S. President heads to the Capitol for inauguration on January 20, with ETFs holding approximately 1.1 million Bitcoins (See OB#22).

ETF accumulation based on historical trends seen in 2024

Markets

Ethereum still struggles despite favorable supply dynamics.

Betting markets currently assign ETH only a 12% chance of reaching a new all-time high this year. The lukewarm appeal of ETFs has dampened traders’ mood, though investors seem largely unfazed. While Ethereum is now inflationary, its year-to-date supply growth was just 89k Ether, compared to the 5.7 million coins that have moved into staking. Concerns over rehypothecation are somewhat alleviated, as liquid staked ETH has seen less than 1 million coins added to Lido.

2024 net daily balance of ETH supply for staked less new supply

Markets

October volumes cross 2024 into second largest trading year.

Over $12.1 trillion in Bitcoin trading volume has been recorded this year, just surpassing the $11.4 trillion of 2022. The highest remains 2021, with nearly $18 trillion traded on crypto exchanges, though this does not account for ETF volumes or the substantial increase in CME futures trading. Including spot and futures, this has been crypto’s most traded year by far. Currently, open interest on the CME stands at $12 billion, while the remaining futures crypto markets total a steady $19 billion with nearly two months left in the year.

Quarterly Bitcoin trading volumes on crypto exchanges  |  $ trillions

Markets

US dollar: downtrend repeat as in 2016 or can strength be delivered with high rates?

Among the twenty core promises made by incoming U.S. President Donald Trump is ensuring that the U.S. dollar retains its status as the world’s reserve currency. From a crypto perspective, this is already evident, with stablecoins predominantly pegged to the dollar. Less than 500 million euros have been tokenized across the board.

Inflation remains a critical topic that will impact the range of policy options. Betting markets have quickly shifted against a potential rate cut in December (see chart). While this could positively impact the U.S. dollar, it also means delivering on other promises will come at a substantial interest cost, as U.S. debt continues to escalate, leading to what some describe as a “nonstop melt-up.” Funding city rebuilds and the military isn’t cheap, and at 4-5% interest rates, the costs add up quickly.

For Bitcoin, it’s worth remembering that Trump oversaw not one but two all-time high cycles during his 2016-2020 presidency. However, those gains came against a backdrop of a weakening dollar, unlike the stronger dollar environment today.

UD dollar index | DXY

Polymarket: US federal reserve rate cut in December

Economic calendar

Key events this week: US fed rate, jobless claims and Michigan inflation expectations.

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