Bitcoin ended last week at approximately the same level that it started, around 96,000. There was some choppiness and volatility, with the price rising to a record high of 98.9k before dropping to 91k on Tuesday and then steadily grinding higher back towards 96k. The world’s largest cryptocurrency is starting the new week just below this level at 95.3k but keeps the key 100k milestone in focus.

The picture with altcoins was more mixed. While Solana fell lower by 3%, Ethereum rallied 11%, and XRP saw a 40% gain.

Last week’s top-performing meme coins included Ski Mask Dog (SKI), which rose 335%, and Top Hat (HAT), which rose 117%. Shiba Inu rose 20% and Pepe 10%.

BTC ETFs post a weekly net outflow, but November saw record inflows

Institutional demand last week offered a clearer perspective on Bitcoin’s fallback and recovery. According to SoSo Value data, spot Bitcoin ETFs started the week with two straight days of net outflows totaling $558.1 million by Tuesday. This was then followed by a modest recovery in demand on Wednesday and Friday (the ETFs were closed on Thursday for the Thanksgiving holiday).

Across the week, Bitcoin ETFs experienced very modest outflows of $138.07 million, ending a seven-week run of inflows.

Yet despite those outflows, November was the strongest month yet for spot Bitcoin ETF, with a total of $6.2 billion in net inflows, according to data from Bloomberg. This surpassed the previous peak of $6 billion achieved in February amid investor euphoria over the product’s launch at the start of the year. We can expect continued inflows into ETFs, especially under a Trump administration, where it will be easier for businesses in retirement funds to own the asset.

The surge in demand for BTC ETFs in November came after Trump’s election victory. He had pledged to reverse the Biden administration’s strict stance on cryptocurrencies and create a more crypto-friendly regulatory environment.

Corporate buying continues, underpinning the price

MicroStrategy bought more Bitcoin last week, acquiring 55k BTC for $5.4 billion, and now holds a total of 386,700, around 1.8% of the total supply. Later in the week, Marathon Digital announced that it had acquired a further 703 BTC in November, taking its holding to 6,474, with $160 million available for additional purchases. MARA is the second largest corporate holder of Bitcoin after MicroStrategy. Corporate capital is becoming an increasingly important flow to consider.

Bitcoin holders buy the dip

Data from CryptoQuant showed that holders bought back the dips at the start of last week. When the BTC price fell from Monday’s peak of 98.9k to Tuesday’s low of 91k, holders accumulated 35,449 BTC in an encouraging sign of demand. It’s worth keeping an eye on whether this trend continues.

However, Glassnode’s weekly report showed that the 42% rally in Bitcoin drove long-term holders to realize an unprecedented $2.02 billion in daily profit, a new record high. The supply overhang could need a re-accumulation phase before another sustained price increase.

Could ETH enjoy a bullish December?

Ethereum rose 11% last week, heading towards 3.7k. However, the price is still some way from its record high of $4867 in 2021. Still, increasingly encouraging signals exist that the token could be on the verge of a significant rally.

Spot ETH ETFs post record daily inflows

Spot ether ETFs in the US hit a record high in daily inflows this week, surpassing spot Bitcoin ETF inflows on the same day. On November 29, $332.9 million flowed into the nine spot Ether ETFs, surpassing the previous daily record of $295.5 million reached on November 11 and ahead of spot Bitcoin ETFs’ $320 million on the same day.

This is the first time the Ether ETFs have recorded higher inflows than spot Bitcoin ETFs on a day when both saw inflows. This follows recent days when spot ether ETFs have maintained positive inflow days while Bitcoin ETFs experienced outflows. This could be showing some signs that a rotation has begun.

The pick-up in ETH ETF demand comes as the price of Ether jumped 11% last week. The coin, seen as a slow runner throughout this bull run and failing to keep up, was showing signs of playing catch up as it looked to its next target of 3.7k.

ETH’s Golden Cross brings 4k into focus

Technically, the picture is looking increasingly bullish for Ethereum this week after a golden cross bullish technical indicator, which is often considered a precursor to strong upward momentum, appears to be forming on the daily chart.

The RSI continues to support further upside while remaining out of overbought territory, and the MACD is bullish, adding to the upbeat picture.

Additionally, multiple other signs align with a breakout. Ether open interest peaked at 24.04 billion on November 28, its highest level ever. The open interest record confirms strong ETH derivative demand alongside solid record ETF demand.

Exchange reserve data also confirmed growing confidence among ATH holders. Ether exchange reserves are now at the level of US in April 2024, and the currency has booted two months of positive exchange reserves for the first time this year.

This sign is of shifting sentiment among ETH holders, which could help the price reach 4000 and beyond.

XRP outperforms

However, the top-performing major altcoin has been XRP, which has been on an absolute tear throughout the past month and has managed to flip BNB for the spot of the fifth largest coin in terms of market capitalization, at $109 billion compared to BNB’s $94 billion.

The jump in XRP comes as Gary Gensler is set to step down as head of the SEC in January and as Wisdom Tree files for Ripple XRP exchange-traded funds (ETFs) in Delaware. This marks the first step towards regulatory approval, with an S1 registration required.

Increased regulatory clarity and the broader upbeat market sentiment have spurred institutional confidence. Meanwhile, partnerships in cross-border payments underscore its utility. XRP also sees increased whale activity in rising OBV levels, which signals significant accumulation. Together, these factors could help pave the way for sustained growth.

Looking ahead

The crypto market remains focused on Trump and his plans to base the US global trade and, most specifically, cryptocurrencies. Bitcoin and its pairs fell last week when Trump’s trade tariff threats had risk sentiment, putting risky assets such as Bitcoin lower. A similar pattern is being seen on Monday as Trump threatens 100% trade tariffs on the BRIC nations should they threaten the dominance of the US dollar. And getting risk assets across the board are heading lower.

Macroeconomic data and expectations regarding the Federal Reserve’s interest rate outlook appear to have been less dominant forces in the crypto market in recent weeks. However, this could change, particularly if US data continues to highlight the strength of the economy, which could lower Fed rate cut bets.

This week, the focus will be on US non-farm payrolls and a speech by Fed Chair Jerome Powell. Any sense that the Fed will adopt an even more cautious stance to rate cuts could hurt the liquidity outlook and negatively impact risk assets such as Bitcoin

1. Introduction to Bitcoin (BTC)

• What is Bitcoin?
• The first decentralized cryptocurrency launched in 2009 by Satoshi Nakamoto. Operates on a peer-to-peer blockchain network with a finite supply of 21 million BTC.
• Key Features:
• Decentralization: No central authority.
• Scarcity: Fixed supply.
• Security & Transparency: Transactions recorded on an immutable blockchain.
• Global Liquidity: Widely adopted across institutions and retail markets.

2. BTC Market Cap and Demand Trends

• Market Cap:
• Bitcoin’s market cap is around $1.8 trillion, driven by strong institutional inflows and retail demand. It dominates approximately 50% of the total cryptocurrency market.
• Demand Trends:
• Institutional Adoption: Spot Bitcoin ETFs approved in 2024 have driven inflows from major financial institutions, such as BlackRock and Fidelity.
• Retail Interest: Increased global interest as BTC continues to be seen as a hedge against inflation and fiat currency risks.
• Emerging Market Growth: Adoption rising in regions like Latin America and Africa due to local currency instability.

3. BTC’s Technical History

• Key Developments in 2024:
• Fourth Bitcoin Halving (April 19, 2024): Reduced block reward from 6.25 BTC to 3.125 BTC, leading to a supply shock and bullish price momentum.
• 1 Billion Transactions Milestone (May 5, 2024): Marked Bitcoin’s long-term network resilience and global usage.
• Spot ETF Approvals (January 2024): The approval of multiple ETFs in the U.S. triggered record inflows and made Bitcoin more accessible to traditional investors.
• All-Time High (November 2024): Bitcoin reached $99,000 due to heightened institutional interest and macroeconomic factors.

4. Fundamental Events Influencing BTC in 2024

• ETF Approval: SEC’s approval of spot Bitcoin ETFs was a game-changer, attracting billions in institutional capital and validating Bitcoin as a mainstream financial asset.
• Regulatory Shifts: Clearer guidelines in the U.S. and Europe have improved market confidence, while restrictive actions in regions like China continue to impact sentiment.
• Macroeconomic Factors: Inflation concerns, global economic uncertainty, and central bank monetary policies have reinforced Bitcoin’s role as a hedge and safe-haven asset.

5. The Impact of Elections on BTC Prices (2024)

1. U.S. Presidential Election (November 2024)

• Trump’s re-election boosted Bitcoin, pushing prices past $76,000 due to pro-business and crypto-friendly sentiment.
• Reduced regulatory uncertainty and anticipation of tax reforms fueled bullish momentum.

2. Global Elections

• Emerging markets like Brazil and Nigeria saw increased Bitcoin adoption following crypto-friendly policy debates.
• Clearer legal frameworks post-election encouraged institutional and retail participation.

3. Market Volatility

• Pre-election speculation caused price swings, while post-election clarity drove confidence.
• Bitcoin’s status as a hedge against fiat uncertainty attracted investors during election periods.

4. Policy Shifts Post-Elections

• New governments influenced crypto regulation, with some fostering growth through favorable policies and others tightening restrictions.

6. Future Expectations for BTC (Next 2-3 Months)

• Short-Term Catalysts:
• Bitcoin is poised to surpass the $100,000 milestone and could reach between $110,000 and $125,000 by early 2025. This outlook is fueled by sustained institutional demand following the success of spot Bitcoin ETFs and decreasing post-halving supply.
• Increasing global adoption and macroeconomic uncertainty continue to position Bitcoin as a preferred asset class for investors seeking alternatives to traditional markets.
• Challenges:
• Market Corrections: After rapid price surges, some analysts expect potential short-term pullbacks due to profit-taking and market consolidation.
• Regulatory Risks: Ongoing scrutiny in various regions could lead to temporary volatility, especially if new policies impact trading access or taxation.
• Price Outlook:
• Support levels are projected around $95,000-85,000, with resistance near $110,000. A bullish scenario could see Bitcoin testing $120,000-$125,000, while in a more conservative scenario, it may consolidate between $105,000 and $110,000.

These projections reflect a growing consensus that Bitcoin’s trajectory remains bullish, with many analysts seeing continued institutional interest as a primary driver into early 2025.

Conclusion: Why Investing in Bitcoin Makes Sense

Bitcoin has cemented its position as a key player in the global financial system, driven by its unique characteristics and the evolving economic landscape. Here's why Bitcoin remains a compelling investment:

1. Proven Growth Potential:
• Bitcoin reached an all-time high of $99,000 in 2024, reflecting strong institutional interest and global adoption.
• Its limited supply (capped at 21 million) ensures scarcity, a key factor for long-term value appreciation.
2. Hedge Against Inflation:
• As fiat currencies face devaluation and inflationary pressures, Bitcoin offers a decentralized alternative for preserving wealth.
3. Global Acceptance and Integration:
• Approval of Spot ETFs, increasing adoption in emerging markets, and growing use cases in remittances and commerce position Bitcoin as a mainstream asset.
4. Technological and Market Resilience:
• Bitcoin’s robust network has scaled to process over 1 billion transactions, proving its reliability and resilience amidst growing demand.
5. Future Growth Catalysts:
• The ongoing post-halving supply crunch, coupled with increased institutional inflows, positions Bitcoin for significant upside in the coming months and years.

Call to Action

With Bitcoin poised to surpass $100,000, now is an opportune time to consider investing. Whether you're looking to diversify your portfolio, hedge against inflation, or capitalize on emerging opportunities, Bitcoin offers a unique blend of security, growth, and global relevance.

Remember, while Bitcoin offers great potential, it’s important to invest wisely and consider your risk tolerance. Join the movement shaping the future of finance—invest in Bitcoin today!

August 19, 2024

In this weekly report we discuss:

Despite a 5% mid-week selloff, which saw Bitcoin fall to a low of 56.5k, the cryptocurrency ended last week not far from where it started the week. Bitcoin has struggled to rise meaningfully above 60k.

More hot takes:

US inflation cools, and recession fears ease. US inflation cooled to its lowest level in 3-years, and encouraging retail sales and consumer confidence data helped ease recession fears.

Stocks outperform, and Gold hits an all-time high. The favourable risk environment saw the S&P500 book its strongest weekly rise since October 2023. Gold has risen above $2500 to an ATH.

13-F filings reveal more institutional flows. Update filings for spot BTC ETFs indicate a rise in institutional flows despite the Bitcoin price falling across the quarter, which bodes well for Bitcoin.

Bitcoin struggles to retake 60k; Gold hits an all-time high

Bitcoin traded flat last week despite a 5% mid-week selloff. The largest cryptocurrency started last week at 57.8k and quickly rose to a peak of 61.5k before sellers took control, pulling the price to a low of 56.2k mid-week. Here, dip buyers came in, bringing the price up towards 60k at the end of the week. Heading into the new week, Bitcoin is again on the back foot, trading -1.5% at 58.7k.

Altcoins saw a mixed performance, with BNB and Ether booking gains of 2.2% and 0.47% last week, respectively. Meanwhile, Solona was one of the worst-performing major altcoins, falling 5.5% last week.

US recession fears ease & Fed September rate cut bets are in focus

Macro continues to be a strong driver of the crypto market owing to an absence of major sector-specific factors. US data last week helped to calm recession fears while keeping bets on track for a September rate cut from the Federal Reserve.

US inflation data (CPI) showed that inflation eased to 2.9% annually, down from 3%, which is in line with forecasts and the lowest level in three years. The data supports the view that inflation continues to cool toward the Fed’s 2% target level and reinforces the view that a September rate cut is likely.

Meanwhile, retail sales rose by a stronger-than-expected 1% in July. US Michigan consumer confidence was also ahead of estimates, helping to calm fears of a recession that had flared up at the start of the month following a weak US non-farm payroll jobs report.

As a result, the market reined back expectations of a 50 basis point rate cut from the Federal Reserve in September to 25%, down from a 50/50 probability just a week ago. The market continues to price in a 25 basis point rate cut.

Stocks post strongest gains since October 2023 & Gold hits an ATH

As inflation cooled and recession fears eased, US stocks saw exceptionally strong weekly performances. The S&P 500 gained almost 4%, its strongest weekly rise since October last year. Meanwhile, the Dow Jones rose back above 40k.

It wasn’t just stocks that outperformed; the prospect of a lower interest rate environment, a weaker USD, and renewed signs of China buying sent Gold above $2500 to a record high.

Meanwhile, the USD has fallen to a 7.5-month low against its major peers. A weaker USD can often help lift BTC/USD, although that doesn’t appear to be the case currently.

Bitcoin struggles to retake 60k

Despite the upbeat data, a weaker USD, and strong gains in stocks and Gold, Bitcoin has been trading relatively range-bound and has been unable to break above the 61K level. Sentiment in the market has slowed in the past week owing to a lack of crypto-specific catalysts. Bitcoin’s perpetual futures funding rates turned negative. Gas prices also slumped, which could be considered an indication of lower activity on the network.

Bitcoin has struggled to push above 60k amid ongoing concerns over the distribution of coins from the Mt Gox estate and the US government. Still, the price has shown resilience to these distribution headlines, which bodes well for the outlook for the remainder of the year. Seasonality doesn’t favor Bitcoin in August or September, which could also play into Bitcoin’s indecision.

Bitcoin seasonality over the past ten years:

Bitcoin ETF flows & institutional ownership

Spot Bitcoin ETFs saw $32.4 million in cumulative net inflows last week. The products recorded four days of positive net inflows versus one day of net outflows. The only day in the red was August 14, when net outflows reached $81.4 million.

Updated 2Q2413F filings for US spot Bitcoin ETFs were released on August 14th and captured the position of institutional ownership as of June 30. Notable new holders included Goldman Sachs with $412 million and Morgan Stanley with $188 million, both of whom are likely to hold shares on behalf of clients as part of their private banking and wealth management arms.

Across Q2, the ETF complex saw net inflows of $2.4 billion, although total assets under management (AUM) of spot Bitcoin ETFs dropped from $59.3 billion to $51.8 billion. This is due to the Bitcoin price dropping from 70.7K to 60.3K.

Continued ETF inflows during Bitcoin’s underperformance could be seen as a positive- a promising indicator of sustained interest in crypto from new pools of capital.

Notably, a growing portion of these plays are driven by institutions, whose ownership rose from 24% to 21.4%. The proportion of institutional holders categorized as investment advisors increased to 36.6% from 29.8%.

We will likely continue to see the investment advisors’ holdings increase as more brokerage houses complete due diligence on these funds and they become more accepted within the institutional sphere.

Week Ahead

The outlook for US interest rates could become more apparent this week when Federal Reserve Chair Jerome Powell speaks at the central bank’s Jackson Hole Symposium at the end of the week. Before then, politics will be focused on the Democratic National Convention, and PMI data will shed some light on the strength of the economy.

1. Jackson Hole Symposium

Federal Reserve Chair Jerome Powell will speak on Friday, delivering a keynote address at the Central Bank’s annual economic symposium in Jackson Hole, Wyoming. The markets will be watching for signals of the pace and timing of rate cuts over the coming months. Fed Chair Jerome Powell could use this opportunity to prepare the market for a September cut, which could help the debate change from “Will they or won’t they cut” to “How big will they go?”. If traders hear rate cuts are coming, they could react favourably.

A lower interest rate environment benefits risk assets such as Bitcoin and stocks. Meanwhile, the USD could fall further, and Gold could reach fresh record levels.

2. FOMC minutes

The Fed will publish the minutes of the July FOMC meeting on Wednesday. At the meeting, the Fed left rates unchanged, but Fed Chair Powell acknowledged progress on curbing inflation, leaving the door open to a September rate cut. In addition to the minutes of the Fed meeting, several Fed officials are due to speak across the week and could provide more clues about the Fed’s next moves.

3. Democrat Convention

The US Presidential election race is heating up. Kamala Harris is currently neck and neck with Trump. The Democrats will look to boost Kamala Harris’ candidacy at the party convention in Chicago. Key Democrat figures are expected to deliver speeches supporting Harris. Investors will be keen to gain clarity on Hariss’ policy position. So far, Trump has maintained a pro-crypto stance across the election campaign, making him the preferred candidate in the crypto space. When Trump was ahead in the polls, Bitcoin and cryptocurrencies received a boost. Now Kamala Harris could take the lead, sentiment toward crypto could take a hit.

Gold price is making a tepid recovery attempt near $1,870 early Friday, reverting toward a fresh two-week high of $1,885 set on Thursday. Gold price has resumed the upside, as the United States Dollar (USD) buyers take a breather amid retreating US Treasury bond yields.

Top-tier US sentiment data and Fedspeak in focus

Investors reassess renewed hawkish US Federal Reserve (Fed) expectations, spurred by the unexpectedly hot Consumer Price Index (CPI) data from the United States. The US CPI increased 0.4% last month after a 0.3% gain in August, the Labor Department said on Thursday. On an annual basis, the CPI inflation steadied at 3.7% in September, at the same pace as seen in August while beating estimates of a 3.6% rise.

The US inflation data reinforced the Fed’s “higher rates for longer” narrative, lifting the US Dollar and the US Treasury bond yields from their recent two-week troughs. Gold price, thereafter, reversed sharply from a two-week high above $1,880 and tested bids below the $1,870 mark, as the revival of hawkish Fed bets dented risk sentiment, aiding the US Dollar rebound.

Commenting on the latest inflation report, Boston Fed President Susan Collins said that it underscores uneven progress toward restoring price stability, reiterating her view that the central bank might have to raise rates again to combat inflation.

The probability of a rate hike in December from the Fed spiked up to 38%, according to the CME Fedwatch tool, compared with about a 28% chance seen before the report. Currently, markets price a 30% chance of a final Fed rate hike in December.

The reaction to the US CPI report was short-lived, as the US Dollar sellers have returned on Friday, even though risk sentiment remains sour after softer-than-expected Chinese CPI and Producer Price Index (PPI) data.

China’s Consumer Price Index (CPI) stagnated at 0% YoY in September after accelerating by 0.1% in August. The market expected an increase of 0.2%. China’s Producer Price Index (PPI) dropped 2.5% YoY in September, compared with a 3.0% decline registered previously. The market forecast was for a 2.4% decline.

Attention now turns toward the US Preliminary UoM Consumer Sentiment and Inflation Expectations data for fresh cues on the Fed’s interest rate outlook. Speeches from Fed policymakers will also play a pivotal role in influencing the US Dollar valuations alongside the end-of-the-week flows.

Gold price technical analysis: Daily chart

The Gold price brief recaptured the key short-term descending 21-Daily Moving Average (DMA) at $1,878 but failed to yield a daily closing above the latter.

The 14-day Relative Strength Index (RSI) indicator is lying just below the midline, suggesting that the upside attempts appear temporary in Gold price.

Failure to seek a weekly close above the 21 DMA at $1,878 could reinforce bearish interest, fuelling a fresh downswing toward Wednesday’s low of $1,859.

The next relevant support is seen at the $1,850 psychological level.

On the upside, recapturing the 21 DMA barrier on a sustained basis will confirm a bullish reversal from multi-month troughs. Gold buyers will then target the $1,900 threshold. At that level, the mildly bearish 50 DMA coincides.

Further up, powerful resistance around the $1,925 level could be challenged, where the 100 and 200 DMAs hang around.

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Here are five notable charts to consider in commodities as the week gets underway.

Metals

Jerome Powell has spoken. The Federal Reserve chairman — in a highly anticipated speech at Jackson Hole on Friday — said the US central bank is prepared to raise interest rates further if needed and that borrowing costs would likely remain elevated. That took some of the edge off of spot gold’s first advance in five weeks, with it slipping back toward $1,900 an ounce. At the same time, global holdings in bullion-backed exchange-traded funds shrank for 13 straight weeks, the longest stretch since November, and are on course for their third straight month of net outflows.

While there are signs that US inflation may have peaked, the fact that the Fed’s tightening cycle may not be over will likely keep a lid on future gains for the non-interest bearing precious metal, which tends to have an inverse relationship with interest rates.

Fossil Fuels

Repeated pledges by governments to combat climate change and help mitigate extreme weather events have done little to curb subsidies for oil products, coal and natural gas, which surged to a record $7 trillion last year. Explicit support — such as regulated prices set below international levels and energy bill rebates — almost doubled to $1.3 trillion from the prior year, according to the International Monetary Fund. Implicit support — undercharging for environmental costs and failing to levy taxes on consumption, for example — jumped to $5.7 trillion. In total, backing of fossil fuels costs the equivalent of 7.1% of global gross domestic product, the IMF found. Cutting subsidies, which help keep energy prices low but also bolster demand, will be key as the world seeks to limit global warming to 1.5C from preindustrial levels.

Shale

Oil drillers across the most prolific US shale patches are scaling back activity after staging a robust comeback from the pandemic. Despite well-performance improvements, production is expected to decline over the next two months after setting a record in July with major explorers maintaining capital discipline. Meanwhile, oil prices have been volatile amid concerns over output cuts from Saudi Arabia and Russia, as well as a disappointing economic recovery in China. The production pullback in August and September comes as the Biden administration seeks to rebuild emergency reserves after a historic drawdown in the wake of Russia’s invasion of Ukraine last year. Even so, longer-term shale output is expected to grow through the end of this decade and then peak.

Agriculture

The Kremlin’s efforts to paralyze Ukrainian food shipments are succeeding, with a third of the country’s crop exports wiped out since its Black Sea ports were effectively blocked last month when Russia pulled out of the safe-corridor pact that had been in place since July 2022. With fewer routes to the market — and many of those under threat amid the ongoing war with Russia — Ukraine’s grain stockpiles are expected to swell through next year, according to the US Department of Agriculture. Shipments that do succeed are facing delays and higher transport costs, adding further risks to a key component of its economy. On the flip side, Russia continues to benefit from Ukraine’s weakness: exports are booming and are expected to make up nearly a quarter of global wheat trade in the 2023-24 season.