Written by: Nathan Frankovitz, Matthew Sigel, VanEck
Compiled by: Wu Says Blockchain
Driven by the regulatory benefits following Trump's election, Bitcoin successfully broke through its historical high. As market attention continues to rise, various key indicators suggest that the strong momentum of this bull market is likely to persist.
As we predicted in September, Bitcoin (BTC) prices have experienced high volatility following the election. Now, Bitcoin has entered uncharted territory with no technical price resistance, and we believe the next phase of the bull market is just beginning. This pattern is similar to what occurred after the 2020 election when Bitcoin prices doubled before the end of the year and further increased by about 137% in 2021. With the significant shift in government support for Bitcoin, investor interest is rapidly increasing. Recently, we have seen a surge in investment inquiries, with many investors realizing their allocations in this asset class are significantly insufficient. While we closely monitor for signs of market overheating, we reaffirm our price target of $180,000/BTC for this cycle, as tracked key indicators continue to show persistent bullish signals.
Bitcoin Price Trends
Market Sentiment
The 7-day moving average (7 DMA) of Bitcoin reached $89,444, setting a new all-time high. On election night, Tuesday, November 5, Bitcoin surged about 9%, hitting an all-time high of $75,000. This aligns with our previous observations: as the likelihood of Trump's victory increases, Bitcoin prices tend to rise. Trump explicitly promised during his campaign to end the SEC's 'enforcement regulation' strategy and to make the U.S. the 'world capital of crypto and Bitcoin.'
After Trump's election to the presidency, regulatory resistance has turned into momentum. Trump has already begun appointing pro-crypto officials in the executive branch, and with the Republican Party holding a united government, the likelihood of related supportive legislation passing has increased. Key proposals include establishing a national Bitcoin reserve plan and rewriting the relevant legislation on crypto market structure and stablecoins, with FIT21 expected to be rewritten in market- and privacy-friendly terms, and a new stablecoin draft allowing state-chartered banks to issue stablecoins without Federal Reserve approval.
As countries like those in BRICS explore alternatives such as Bitcoin to bypass dollar sanctions and currency manipulation, stablecoins offer a strategic opportunity for the dollar's global reach. By eliminating regulatory barriers and allowing state-chartered banks to issue stablecoins, the U.S. can maintain the global influence of the dollar and leverage the faster adoption of cryptocurrencies in emerging markets. There is an immense demand for financial services, hedging against domestic currency inflation, and decentralized finance (DeFi) in these markets.
We expect the SAB to be repealed in the first quarter after Trump's inauguration, whether by the SEC or Congress, which will prompt banks to announce cryptocurrency custody solutions. If Gary Gensler has not resigned, Trump may fulfill his promise by replacing the SEC chairman with a candidate more supportive of crypto, ending the agency's notorious 'regulation by enforcement' era. Additionally, by 2025, Ethereum (ETH) ETFs in the U.S. will be revised to support staking, the SEC will approve the 19b-4 proposal for Solana (SOL) ETFs, and the creation and redemption of ETFs in physical form will make these products more tax-efficient and liquid. Given that Trump has previously acknowledged the commonality between Bitcoin mining and AI in energy-intensive aspects, energy regulations are expected to ease, leading to cheaper and more abundant baseload energy (such as nuclear power), thereby bolstering the U.S.'s global leadership in energy, AI, and Bitcoin.
This election marks a bullish turning point, reversing the capital and job outflows caused by previous hardline policies. By stimulating entrepreneurial vitality, the U.S. is poised to become a global leader in crypto innovation and employment, transforming cryptocurrencies into a key domestic growth industry and a vital export product for emerging markets.
Bitcoin Dominance
The 7-day moving average of Bitcoin dominance (a measure of Bitcoin's market cap relative to the total market cap of all cryptocurrencies) rose by 2 percentage points to 59% this month, reaching its highest level since March 2021. Although this upward trend starting from 40% in November 2022 may continue in the short term, it is likely to peak soon. In September, we noted that Harris's victory could enhance Bitcoin's dominance due to a clearer regulatory status for Bitcoin as a commodity. In contrast, Trump's supportive stance on crypto and his expanded cabinet team may drive broader investment in the crypto market. As Bitcoin reaches new highs in an innovation-friendly regulatory environment, the wealth effect and reduced regulatory risks are expected to attract native capital and new institutional investors into DeFi, thereby enhancing returns for smaller projects within the asset class.
Regional Trading Dynamics
At first glance, traders in the Asian market trading hours this month appear to have significantly increased their Bitcoin holdings, contrasting with the trend in recent years where Asian traders typically net sold while European and U.S. traders net bought. However, the surge in Bitcoin prices on election night occurred during Asian trading hours, likely due to a large number of U.S. investors trading around the election. This unique event makes it difficult to attribute such price fluctuations solely to regional dynamics. Consistent with historical behavior, traders in the U.S. and European trading hours continued to increase their Bitcoin holdings, maintaining the price performance trend observed in October.
Source: Glassnode, 11/18/24 (past performance does not guarantee future results.)
Key Indicators
To assess the potential upside and duration of this bull market cycle, we analyzed several key indicators to evaluate market risk levels and potential price peaks. This month, our analysis begins with perpetual contracts (perps), where the performance of funding rates provides insights into market sentiment and helps gauge the likelihood of market overheating.
Bitcoin prices typically show signs of overheating when the 30-day moving average funding rate (30 DMA Perp Funding Rates) exceeds 10% and persists for 1 to 3 months.
BTC Average Return vs. Perpetual Funding Rate Comparison (January 4, 2020 — November 11, 2024)
When 30 DMA annualized Perps fees exceed 10%, BTC price performance
Source: Glassnode, as of November 12, 2024
Starting from April 2020, we analyzed periods when the 30-day moving average perpetual contract funding rates exceeded 10%. The average duration of these periods was about 66 days, with an average return of 17% from opening to closing, although the duration varied significantly across periods. The only exception was the single-day spike response on June 18, 2024, reflecting short-term market sentiment. Other instances lasted several weeks, highlighting structural bullish sentiment, which typically leads to significant short to medium-term gains.
For example, the high funding rate phase starting on August 31, 2021, lasted for 23 days, followed by a 28-day cooling period, and then resumed for another 51 days on October 19. If this brief interval is included, the total duration of the high funding rate in 2021 reached 99 days. Similarly, the current high funding rate phase starting on November 12, 2024, has lasted for 80 days, followed by a 19-day interval, and then resumed for 69 days of high funding rates, totaling 168 days, comparable to the 186 days from November 11, 2020, to May 21, 2021. Notably, purchasing Bitcoin on days when the funding rate exceeds 10% has resulted in higher average returns across 30-day, 60-day, and 90-day timeframes compared to days with lower funding rates.
However, data shows there is a pattern of underperformance over longer time frames. On average, Bitcoin purchased on days when the funding rate exceeds 10% tends to underperform the market starting from 180 days, with this trend becoming more pronounced over 1-year and 2-year time frames. Given that market cycles typically last about 4 years, this pattern suggests that sustained high funding rates are often correlated with cycle tops and may serve as an early signal of market overheating, indicating higher susceptibility to long-term downside risks.
Bitcoin Cycle Analysis
Source: Glassnode, as of November 13, 2024
As of November 11, Bitcoin entered a new phase, with funding rates exceeding 10% again. This shift indicates stronger short to medium-term momentum, as historically, higher funding rates are associated with higher 30-day, 60-day, and 90-day returns, reflecting increased bullish sentiment and demand. However, as funding rates remain high, we may move away from a similarly favorable long-term (1–2 years) return phase. Given the current supportive regulatory environment for Bitcoin, we anticipate another high-performance period similar to the aftermath of the 2020 election, when sustained funding rates above 10% drove a 260% increase over 186 days. With Bitcoin's current trading price approaching $90,000, our target price of $180,000 remains feasible, reflecting a potential cyclical return of about 1,000% from the cycle's low to peak.
Higher 30-day moving average (DMA) relative unrealized profit levels (>0.60 and 0.70) have historically often predicted peaks in Bitcoin prices.
BTC Average Returns vs. 30-Day Moving Average Relative Unrealized Profit (RUP) Comparison (November 13, 2016 — November 13, 2024)
Source: Glassnode, as of November 13, 2024
BTC Average Returns vs. 30-Day Moving Average Relative Unrealized Profit (RUP) Comparison (November 13, 2016 — November 13, 2024)
Source: Glassnode, as of November 13, 2024
Next, we focus on Relative Unrealized Profit (RUP), another important indicator used to measure whether the Bitcoin market is overheated. RUP measures the proportion of unrealized gains (i.e., book profits that have not yet been realized through sales) in the total market cap of Bitcoin. When the Bitcoin price exceeds the last purchase price for most holders, this indicator rises, reflecting that more of the market is entering profit, thereby embodying market optimism.
Historically, higher 30-day moving average (DMA) RUP levels (especially above 0.60 and 0.70) often indicate strong market sentiment and potential overheating. As shown in the red ranges in the chart, when RUP 30 DMA exceeds 0.70, it typically coincides with market tops, as a higher proportion of unrealized profits triggers more profit-taking. Conversely, when RUP levels fall below 0.60, it indicates more favorable market conditions for long-term buying, with historical data showing higher 1-year and 2-year returns for purchases made below this threshold.
Analysis of the past two market cycles shows that a 30 DMA RUP level between 0.60 and 0.70 typically yields the highest short to medium-term returns (7 days to 180 days). This range often reflects a mid-stage of a bull market, where market optimism is rising but has not yet reached excessive levels. In contrast, when RUP exceeds 0.70, returns across timeframes consistently exhibit a negative correlation, reinforcing its role as a strong sell signal.
As of November 13, Bitcoin's 30 DMA RUP was approximately 0.54, but the daily value has exceeded 0.60 since November 11. According to our detailed data table, as RUP approaches 0.70, risks gradually increase, emphasizing the importance of short-term trading within the 0.60 to 0.70 range. However, if RUP's 30 DMA rises close to 0.70, it may indicate market overheating, warranting caution for long-term positions.
Search interest for 'cryptocurrency' in the U.S.
Source: Google Trends, as of November 18, 2024
The search interest for 'cryptocurrency' as a Google keyword is an important indicator of retail investor interest and market momentum. Historically, peaks in search interest often correlate closely with peaks in the total market cap of cryptocurrencies. For instance, after the peak search interest in May and November 2021, significant market downturns followed: a roughly 55% correction occurred about two months after the May peak, while a bear market lasting about 12 months followed the November peak, with a total decline of approximately 75%.
Currently, search interest is only 34% of the peak in May 2021, slightly below the local peak of 37% observed in March 2024 (when Bitcoin reached its highest price of the current cycle). This relatively low search interest indicates that Bitcoin and the broader crypto market have not yet entered a speculative frenzy stage, leaving room for further growth, as mainstream attention levels typically associated with market tops have not yet been reached.
Coinbase App Store Ranking
Source: openbb.co, as of November 15, 2024
Similar to Google's search interest in 'cryptocurrency', Coinbase's ranking in app stores is also an important indicator of retail investor interest. On March 5 of this year, Coinbase re-entered the top 50 in app store rankings after Bitcoin prices surged about 34% in 9 days and retested the historical high of about $69,000 in 2021. Although Bitcoin reached a new high of about $74,000 later in the month, interest among retail investors waned as price volatility dipped to summer lows and public attention shifted to the presidential election. However, the breakout on election night reignited retail interest, with Coinbase's app store ranking soaring from 412th on November 5 to 9th on November 14. The surge in participation drove further price increases, also setting a new record for Bitcoin ETF inflows.
Bitcoin Network Activity, Adoption, and Fees
Daily Transaction Volume: The 7-day moving average of daily transaction volume is approximately 543,000 transactions, down 15% month-over-month. Despite the decrease, activity remains strong, at the 96th percentile of Bitcoin's history. Although the number of transactions has declined, the larger transaction load has offset this impact, as evidenced by the increase in transfer amounts.
Ordinals inscriptions: Daily inscription (NFTs and meme coins on the Bitcoin blockchain) trading volume increased by 404%, reflecting a resurgence of speculative enthusiasm driven by rising prices and regulatory benefits.
Total Transfer Volume: Bitcoin transfer volume increased by 118%, with the 7-day moving average reaching approximately $85 billion.
Average Transaction Fee: Bitcoin transaction fees decreased by 5%, with an average fee of $3.58 and an average transaction load of about $157,000, corresponding to a transaction fee rate of approximately 0.0023%.
Health and Profitability of the Bitcoin Market
Profit Address Ratio: As Bitcoin prices reach an all-time high, approximately 99% of Bitcoin addresses are currently in profit.
Unrealized Net Profit/Loss: This ratio has increased by 21% over the past month to 0.61, indicating a significant rise in the ratio between relative unrealized profits and unrealized losses. As an indicator of market sentiment, this ratio is currently in the 'Belief-Denial' zone, corresponding to a phase of rapid expansion and contraction in market cycles between peaks and troughs.
Bitcoin On-Chain Monthly Dashboard
Source: Glassnode, VanEck Research, as of October 15, 2024
Bitcoin Miners vs. Total Market Cap of Crypto
Mining Difficulty (T):
Bitcoin's block difficulty has risen from 92 T to 102 T, reflecting that miners are expanding and upgrading their equipment queues. The Bitcoin network automatically adjusts difficulty every 2,016 blocks (approximately two weeks) to ensure an average block mining time of around 10 minutes. The increase in difficulty indicates intensified competition among miners and represents a robust and secure network.
Total Daily Revenue of Miners:
Daily income of miners increased by 30%, benefiting from the rise in Bitcoin prices, but BTC-denominated transaction fees decreased by 30%, impacting total revenue.
Volume of miners transferring to exchanges:
On November 18, miners transferred approximately $181 million worth of Bitcoin to exchanges, equivalent to 50 times the average level over the previous 30 days, pushing the 7-day moving average up by 803%. This extreme fluctuation is the highest level since March, similar to levels seen before Bitcoin's last halving. Although the continued high transfer volume from miners to exchanges may indicate an overheated market, this peak occurred after a summer sell-off by miners, suggesting that it is for operational and growth purposes rather than a signal of a market top.
Total Market Cap of Crypto Stocks:
The 30-day moving average of the MarketVector Digital Assets Stock Index (MVDAPP) increased by 47% month-over-month, outperforming Bitcoin. Major index constituents like MicroStrategy and Bitcoin mining companies directly benefit from the rise in Bitcoin prices through their holdings or mining operations. Meanwhile, companies like Coinbase leverage broader crypto market gains, as rising prices drive expectations for increased trading fees and other revenue sources.
Source: farside.co.uk, as of November 18, 2024
