PTGR OCTOBER HIGHLIGHTS

Dear valuable clients,

Please find the following key insights from our aggregated research:

Overall Take-Home Message:

The cryptocurrency market in October 2024 displayed remarkable resilience and maturity, particularly in its response to price volatility and macroeconomic uncertainties. While institutional accumulation strengthened the market’s foundation, increased regulatory attention suggested an impending shift toward mainstream acceptance. This dynamic landscape highlights cryptocurrency’s growing role within the broader financial system.

What Happened in October?

October was marked by significant fluctuations in Bitcoin, Ethereum, and other digital assets. Driven by whale movements, global regulatory developments, and growing institutional interest, prices demonstrated resilience amidst economic challenges. Here’s an in-depth look at the key events and market dynamics.

1. Bitcoin: Price Volatility and Resilience

Bitcoin (BTC) began the month around $62,870, reaching a peak of $68,616 before a mid-month correction brought it back to approximately $67,625 by the end of October. This volatility reflected a blend of institutional buying, whale profit-taking, and responses to economic announcements.

·       Early October Early in the month, Bitcoin’s price surged by 5.11%, reaching $66,081. This movement was primarily driven by large whale and institutional accumulation, with trading volumes peaking at 122,000 BTC. On-chain data revealed significant institutional deposits on regulated exchanges, indicating a rising appetite for Bitcoin among major financial players.

·       Mid-Month: Bitcoin briefly crossed the $67,000 threshold before a slight decline, losing around 2% due to profit-taking by large holders. This correction coincided with substantial whale transfers to exchanges, causing a temporary pause in the upward trend.

·       End of October Bitcoin regained some ground, stabilizing around $67,625 at month’s end. Volatility eased, indicating a pause in large-scale whale selling and a strengthening of institutional interest. Technical indicators supported this stability, with both RSI and MACD pointing to underlying bullish momentum.

2. Ethereum: DeFi Growth and Fee Reduction

Ethereum experienced an interesting dynamic in October, not only as an asset but also as a platform for decentralized finance (DeFi) and NFT applications. The technical enhancements from the Proto-Danksharding upgrade played a crucial role in making the Ethereum network more accessible and affordable.

·       Transaction Fee Reduction: The Proto-Danksharding update reduced gas fees by 30%, making the platform more attractive for DeFi users. This reduction drove an increase in Total Value Locked (TVL) in Ethereum-based DeFi protocols, reaching $145 billion by the end of the month. This spike in activity shows a rise in participation from both retail and institutional investors, drawn by competitive yields and increased liquidity.

·       Rising DeFi Participation: Ethereum’s DeFi protocols, such as Uniswap and Aave, reported increased activity, supported by lower costs and enhanced scalability. Institutional demand for DeFi also grew, as traditional financial players increasingly see DeFi as a promising avenue for portfolio diversification. The additional liquidity injected into these platforms strengthens Ethereum’s position as a DeFi leader.

3. Whale Activity and Exchange Flows

Whale movements and exchange flows were major factors influencing Bitcoin price fluctuations and other major assets in October.

·       Transfers to Exchanges: At the beginning of the month, whales transferred large amounts of BTC to exchange platforms, creating selling pressure that contributed to Bitcoin’s volatility. Whale transfers are often interpreted as short-term profit-taking indicators, which can trigger cascading sell-offs in a market sensitive to liquidity shifts.

·       Institutional Agreements and Exchange Reserves: Mid-month on-chain data revealed a significant reduction in BTC reserves on exchanges, as institutions and large holders moved funds to cold storage. This shift toward a long-term strategy suggests that institutional players anticipate a rise in BTC value and prefer to avoid immediate price fluctuations. This institutional “hold” trend also contributed to price stability toward the end of the month.

4. Technical Indicators: MACD and RSI

Technical indicators showed an overall positive outlook for Bitcoin throughout October, despite episodes of volatility.

·       Relative Strength Index (RSI): Bitcoin’s RSI remained above 50 for most of the month, indicating dominant buying pressure. RSI peaks, especially around 65-70, marked overbought periods, but the market absorbed these movements well without significant pullbacks, demonstrating market maturity.

·       MACD: The MACD showed signs of strengthening bullish momentum mid-month, though it weakened slightly toward the end. The MACD line’s position above the signal line for most of the month reflected a moderate bullish bias, supported by strong support levels around $66,500.

5. Social Activity and Market Sentiment

Discussions around BTC and Ethereum spiked on social media, especially on Twitter and Reddit, where conversations focused on Bitcoin’s potential to break the $70,000 level. Sentiment indicators revealed moderate confidence among investors, supported by a series of positive news, including ETF approval rumors and Ethereum’s technological advancements.

·       Institutional Optimism: Increased institutional interest contributed to a cautiously bullish sentiment, with many analysts anticipating continued growth if products like Bitcoin spot ETFs are approved.

·       Reactions to Economic Data: In October, market players also responded to global economic data, particularly inflation figures and central bank interest rate policies. A less aggressive stance by the U.S. Federal Reserve boosted market sentiment, increasing demand for risk assets, including cryptocurrencies.

6. Other Notable Assets and Altcoins

Beyond Bitcoin and Ethereum, several altcoins also gained traction in October, bolstered by institutional interest and technological updates.

·       Solana (SOL): Solana saw rising demand due to updates aimed at improving network speed and stability. Its adoption in sectors like blockchain gaming and dApps positioned it as a viable alternative to Ethereum, attracting users seeking lower fees.

·       Polygon (MATIC): Polygon’s partnership with DraftKings for blockchain gaming development demonstrated how Polygon is positioning itself within the digital entertainment industry. Its ability to provide scalable, cost-effective infrastructure strengthens its appeal to companies integrating blockchain into their business models.

Major Developments

October witnessed significant regulatory and political developments globally, alongside crucial technological and institutional advancements.

Regulatory Movements and Political Highlights

1. South Korea and Japan

·       South Korea: In a landmark decision, South Korea delayed the implementation of its crypto tax laws, providing temporary relief for local investors. The government cited the need for improved compliance infrastructure, aligning with feedback from the crypto community on regulatory readiness.

·       Japan: The Japanese Financial Services Agency launched a cross-border stablecoin payment pilot in partnership with Southeast Asian nations. Aimed at reducing costs and improving payment efficiency, this initiative positions Japan as a regional leader in blockchain-based financial solutions.

2. United States - Crypto in the Election Spotlight Bitcoin entered the U.S. political arena, with former President Donald Trump becoming the first major candidate to accept crypto donations. Trump’s support for Bitcoin sparked significant media attention, with industry analysts speculating on its potential market impact. Predictive market platform Polymarket reported a surge in investor activity, underscoring the growing political interest in cryptocurrency.

3. European Union’s Enhanced AML Regulations The EU advanced its Anti-Money Laundering (AML) regulations in October, establishing stricter Know Your Customer (KYC) protocols. Set for full implementation by 2025, these measures seek to increase transparency, reduce illicit activity, and encourage institutional investment in compliant exchanges.

Institutional Expansion and Adoption

Microsoft’s Interest in Bitcoin Microsoft hinted at potential Bitcoin engagement, with shareholder advocacy calling for the tech giant to explore BTC investments. A Microsoft entry would represent a significant institutional endorsement and increase BTC’s legitimacy in mainstream finance.

Tether’s Stablecoin Milestone Tether’s USDT achieved a new record, surpassing $120 billion in market cap. Demand for stablecoins reflects the growing need for reliable, fiat-backed digital assets in volatile markets. Tether’s growth also highlights its critical role in cross-border transactions, offering stability within the crypto ecosystem.

Technological Advancements

Ethereum’s Scalability and DeFi Innovations The Proto-Danksharding update on Ethereum underscores its position as a DeFi leader, enhancing network efficiency and lowering gas fees. Ethereum’s DeFi Total Value Locked (TVL) rose by 10%, reaching $145 billion by October’s end, driven by increased participation on platforms like Uniswap and Curve.

Interoperability Milestones Chainlink introduced its Cross-Chain Interoperability Protocol (CCIP), which allows for seamless communication between different blockchain networks. Tezos and Solana both upgraded their networks for improved transaction speeds and stability, enhancing their appeal for high-frequency trading and time-sensitive applications.

Adoption in the Gaming Industry Polygon’s collaboration with DraftKings demonstrates blockchain’s growing influence in the gaming sector. Leveraging Polygon’s scalability, DraftKings aims to create blockchain-driven gaming solutions that reduce transaction fees, increase transparency, and offer innovative user engagement opportunities.

Security Concerns

Despite October’s positive developments, security challenges underscored the need for vigilance. Key incidents included:

·       Coinbase Phishing Attack: A sophisticated phishing attack targeted Coinbase users, resulting in a $1.7 million loss. This incident underscores the industry’s vulnerability to social engineering tactics and the need for enhanced security protocols.

·       Mt. Gox Payout Delays: Creditors of the bankrupt exchange faced another delay, prolonging uncertainty over the distribution of 137,000 BTC. While alleviating immediate fears of a market-wide sell-off, this delay highlights the legal complexities surrounding crypto asset recovery.

Institutional Adoption and Integration in Traditional Sectors

October saw traditional financial giants expanding their exposure to blockchain and crypto assets, reflecting a growing confidence in digital assets as long-term investments.

Visa’s Stablecoin Integration Visa’s stablecoin integration marked a significant milestone for crypto adoption in traditional finance. By adding stablecoins to its global payment network, Visa enables quicker, lower-cost international transactions, potentially transforming cross-border payments. This development may serve as a blueprint for other financial institutions exploring crypto adoption and showcases stablecoins’ potential to facilitate more efficient global remittance solutions.

Fidelity’s Expanded Crypto Custody Services Fidelity’s move to include Ethereum in its custody services demonstrates growing institutional interest beyond Bitcoin. With Ethereum’s focus on DeFi and NFTs, institutions are increasingly seeking exposure to assets beyond traditional store-of-value roles, attracted by Ethereum’s versatile applications and potential for capital growth within decentralized finance ecosystems.

MicroStrategy’s Long-Term BTC Accumulation MicroStrategy continues to set the benchmark for corporate Bitcoin adoption, adding 5,000 BTC to its holdings in October and bringing its total to over 173,000 BTC. MicroStrategy’s approach emphasizes a long-term view of Bitcoin as a hedge against inflation, bolstering its position as a leader in corporate crypto investments. This model is likely influencing other companies considering digital assets for long-term treasury reserves.

On-Chain Data Analysis and Market Signals

In October, on-chain data analysis revealed several critical metrics, providing insights into market sentiment, investor behavior, and the underlying health of the Bitcoin and Ethereum networks. Examining metrics such as transaction volume, exchange flows, and hashrate allows us to better understand the market forces at play and the trends likely to impact future price movements.

1. Bitcoin Transaction Volume and Whale Activity

Bitcoin’s transaction volume surged to over $1.3 trillion for the month of October, driven largely by whale and institutional activity. The average transaction size increased to approximately $42,000, indicating the influence of large players on the network.

·       Whale Movements: October saw a considerable number of large BTC transfers (over 1,000 BTC per transaction) between exchange platforms and private wallets, often signaling strategic accumulation or selling. Whale wallets, generally defined as those holding over 1,000 BTC, showed mixed behavior throughout the month. Early in October, whales transferred large sums of BTC to exchanges, creating selling pressure and contributing to mid-month price corrections. However, by the end of October, there was a marked reduction in exchange inflows, as whales seemed to shift back to accumulation.

·       Impact on Liquidity and Price Stability: Whale movements have historically impacted BTC liquidity, with large inflows to exchanges often leading to sell-offs. The reduction in these inflows toward the month’s end helped stabilize BTC prices around the $67,000 mark, as major players appeared to adopt a long-term holding strategy, anticipating future price appreciation.

2. Exchange Flows and Reserve Trends

Exchange flows, specifically inflows and outflows of BTC and ETH to and from major exchanges, provide key insights into investor sentiment and market liquidity.

·       Exchange Reserves Decline: October data showed a consistent decrease in BTC held on exchanges, with reserves dropping by around 15% throughout the month. Investors moving BTC off exchanges and into cold wallets typically signals a long-term holding approach, as it reduces immediate sell pressure on the asset. This trend is often interpreted as a bullish signal, as investors move assets to more secure locations with intentions of holding rather than trading.

·       Ethereum Exchange Activity: Ethereum saw similar trends, with a decrease in ETH reserves on exchanges by approximately 12%. This was partly due to increasing interest in staking opportunities, as ETH holders moved their assets to DeFi platforms for yield generation. Additionally, with the Proto-Danksharding upgrade making Ethereum’s network more efficient and affordable, many users opted to transfer their holdings from exchanges to participate in DeFi protocols, which contributed to the month’s rising Total Value Locked (TVL).

3. Bitcoin Hashrate and Miner Behavior

Bitcoin’s hashrate remained stable between 400 and 425 EH/s in October, demonstrating continued confidence among miners despite price fluctuations.

·       Mining Difficulty Adjustment: Mid-month, Bitcoin’s mining difficulty decreased by 1.3%, slightly improving profitability for miners. This reduction helped smaller mining operations maintain profitability, supporting network security and stability. The lower difficulty also reduced the sell pressure from miners, who could afford to hold onto their BTC rather than sell to cover operational costs, thus contributing to market stability.

·       Miner Reserves and Outflows: Miners have a critical impact on market supply as they often sell BTC to fund operational costs. October saw relatively stable miner outflows, suggesting that miners were holding onto their assets in anticipation of higher prices. Stable outflows from miners are generally a positive sign, indicating that the market can sustain demand without excessive new BTC entering exchanges.

4. Ethereum DeFi Metrics and TVL Growth

Ethereum’s DeFi sector experienced a significant increase in Total Value Locked (TVL), growing by 15% in October to reach $145 billion.

·       DeFi Protocol Participation: Protocols such as Uniswap, Aave, and Curve attracted substantial capital inflows, driven by both retail and institutional interest. Lower gas fees due to the Proto-Danksharding update made DeFi activities on Ethereum more affordable, resulting in an increase in active users and transaction volume. This growth in TVL highlights the expanding role of DeFi within the broader financial landscape, with institutions beginning to leverage DeFi for yield generation and capital diversification.

·       Stablecoin Flows: Stablecoins played a vital role in Ethereum’s DeFi ecosystem. USDT and USDC transaction volumes surged, reflecting the role of stablecoins as both safe havens during volatile periods and foundational assets in yield farming and lending activities within DeFi. As a result, stablecoin inflows into DeFi protocols drove liquidity and helped maintain competitive yields.

MicroStrategy & Micheal Saylor

MicroStrategy is an American company specializing in data analytics software, founded in 1989. It went public in 1998, achieving rapid success due to its strategic positioning in the tech market. Listed on the Nasdaq, MicroStrategy saw its valuation soar in its early years, reaching over $13 billion by the end of the internet bubble. Since then, the company has continued to evolve, but its strategic direction took a significant shift in recent years, with a strong focus on Bitcoin investments.

Led by Michael Saylor, MicroStrategy is now in a position that could massively influence Bitcoin’s price. In 2020, as the pandemic threatened the dollar’s value, Saylor sought an alternative and decided to place MicroStrategy’s cash reserves in Bitcoin, making an initial purchase of 21,454 BTC for $250 million. Since then, the company has amassed over 250,000 Bitcoins, equivalent to 1.2% of the total supply, valuing its portfolio at several billion dollars.

To fund this aggressive buying strategy, MicroStrategy adopted a sophisticated financing model through convertible bonds. These bonds, issued at very low-interest rates, offer investors the option to either recover their investment or convert it into MicroStrategy shares at a fixed reference price, well below the current market value. This approach has allowed the company to raise over $4 billion, which it has directly reinvested in Bitcoin.

In October 2024, Saylor announced a bold initiative, the “Plan 2121,” referencing Bitcoin’s fixed supply of 21 million. This plan aims to raise an additional $42 billion through shares and convertible bonds, with the funds earmarked to double MicroStrategy’s Bitcoin holdings, further cementing its position as a top Bitcoin holder in the traditional finance world.

This strategy carries risks. If Bitcoin continues to rise, MicroStrategy’s value and share price could increase exponentially. However, if Bitcoin were to fall, the company might find itself unable to repay its debts, forcing it to sell its Bitcoin holdings and potentially triggering a sharp market decline.

The BullRun Begins

While you were sleeping peacefully, a major event shook the cryptocurrency world: Donald Trump was elected President of the United States. This election, anticipated for months or even years, marks the long-awaited start of the BullRun. The crypto market was shrouded in uncertainty, as a Trump victory was initially seen as risky for cryptocurrencies. However, in a speech at the Nashville conference, he surprised many by mentioning the strategic Bitcoin reserve and expressing his intent to dismiss Gary Gensler, the SEC chair who has been challenging the crypto industry for months. The potential support for Bitcoin mining could also boost U.S. competitiveness.

On the Democratic side, Kamala Harris remained quiet on the subject, and markets dislike uncertainty. With the final result favoring Trump, the political landscape now provides an optimistic framework for Bitcoin and crypto. Immediately following the announcement, Bitcoin reached a new all-time high, driven by this favorable alignment.

However, for this BullRun to be sustainable, a favorable macroeconomic environment is essential. The Federal Reserve (Fed) recently lowered interest rates for the first time in a long time, and the prospect of further cuts continues to strengthen. Such monetary policies stimulate global liquidity, supporting investment in cryptocurrencies. Money creation, amplified by central banks’ quantitative easing policies, weakens the dollar and therefore directly benefits Bitcoin.

Overall, the available liquidity is crucial to driving Bitcoin upwards. The correlation between global liquidity and Bitcoin is striking: more liquidity results in Bitcoin’s price increase. Money creation originates from two sources: bank credit and quantitative easing, injecting liquidity by creating money from thin air. As credit demand rises and central banks maintain their easing policies, the impact is directly reflected in Bitcoin’s price.

Another factor at play is the accumulation of Bitcoin by "whales" – entities holding over 1,000 Bitcoins. This record accumulation by major public, private, and even governmental entities demonstrates a demand that reduces the available supply, creating a supply shock. With capital inflows into Bitcoin ETFs, demand far exceeds the newly created supply, intensifying the upward pressure.

Currently, the excitement for Bitcoin continues to grow with the massive influx of new retail and institutional investors. Clear signals, such as the rise of the Coinbase app in the App Store rankings, show this increasing interest. Everywhere, pension funds are venturing into cryptocurrencies, with all the conditions in place for this long-awaited parabolic phase.

Conclusion

The conditions are aligning for this BullRun to mark a major turning point in the cryptocurrency world. With a favorable macroeconomic environment, ample liquidity, and rising demand, Bitcoin is in an ideal position for a significant upward trajectory. The enthusiasm for cryptocurrencies shows no signs of slowing, and everything indicates that this period could propel the crypto market to new heights.