“While it is often reasonable to extrapolate the future from the past, it is not surprising to see surprises: the future may not be what you expected.
——Redd Leo, founder of Bridgewater Associates (Principles)”
Bitcoin’s breakout has begun and is expected to continue its march toward all-time highs into uncharted territory. Despite the fear, losses, and volatility, we are on the verge of the next phase that could spark the long-awaited post-halving bull run. Since quantitative tightening, the Bitcoin market needs to pay more attention to macro data as a key factor in Bitcoin’s performance.
There are no major fundamental factors this week, with key data starting to appear in the last week of October and culminating in the US election on November 4. A hypothetical victory by Trump could catalyze a positive effect for Bitcoin.
Bitcoin is now up 61.6% year to date and is significantly outperforming the Nasdaq 100’s year-to-date return of 20.7%. Most of Bitcoin’s year-to-date gains have occurred in the first three months and Bitcoin will once again be in the spotlight due to the positive impact of the election.
Interestingly, BTC/RSP was rejected exactly when it reached its all-time high in 2021 and has been consolidating ever since.
Bitcoin appears to be benefiting from its much-anticipated “Uptober” historic move.
Bitcoin Open Interest
This week, open interest hit a record high, with Bitcoin hitting a new all-time high as it neared the $70,000 region. This gave people the feeling that the market was booming. In the process, we witnessed the liquidation of shorts and clearly realized how the price of Bitcoin is driven by spot purchases and futures.
Bitcoin Spot ETF
Bitcoin spot ETFs received $2 billion in inflows (32,371.58 BTC) last week. The U.S. presidential election was a key driver of the massive net inflows of funds into Bitcoin spot ETFs. The market generally believes that Trump's victory will have a positive impact on Bitcoin.
Among them, BlackRock Bitcoin Spot ETF-IBIT had a net inflow of US$1.1445 billion, accounting for 57% of all ETF inflows. As BlackRock analyst Larry Fink pointed out: "The election results are irrelevant to Bitcoin because "the use of digital assets will become more and more a reality around the world."
Bitcoin spot ETF net inflow and outflow (USD)
Bitcoin spot ETF net inflow and outflow (BTC)
The total net asset value exceeds $67 billion, accounting for nearly 5% of the total market value of Bitcoin.
Although Trump’s intention to support Bitcoin is commendable, we cannot blindly believe the promises made by politicians during the campaign. In any case, if the FOMO caused by “Trump’s election success” drives the market up, we should welcome this phenomenon.
Note: All content represents the author's personal views only, is not investment advice, and should not be construed in any way as tax, accounting, legal, business, financial or regulatory advice. Before making any investment decision, you should seek independent legal and financial advice, including advice on tax consequences.
