ARP's Crypto Digest

General Digital Asset Market View:

The week from October 28 to November 1 saw significant activity in the crypto market. U.S. Bitcoin ETFs experienced a notable outflow of $54.9 million on November 1, breaking a seven-day streak of inflows that started on October 23. Despite these sell-offs, except for Grayscale’s Bitcoin trust which gained $13.5 million, the month of October ended with an impressive total inflow of $2.22 billion into Bitcoin ETFs. This surge was largely propelled by a record $872 million inflow into BlackRock’s IBIT fund on October 30.

Bitcoin’s price also showed volatility, initially rising from $67,500 to $73,600, then settling at around $68,800 by November 2, marking a 10.76% increase for October. With the upcoming Fed interest rate decision and the 2024 U.S. presidential election, the market’s mood is cautiously optimistic.

Macro:

The major event this week — and arguably of the year — is the US election. China’s NPC Standing Committee meeting will also be held from November 4–8. From a US macro POV, the key events will be the ISM services print on Tuesday and data dump on Thursday (nonfarm productivity, unit labour costs, claims). With respecet to ROW, China’s October trade data, CPI/PPI and Japanese labour cash earnings will also be in focus. We have several central banks decisions on the calendar this week including the RBA, Fed, BoE, Riksbank and Norges Bank. ECB President Lagarde is also due to speak on Wednesday. Another busy week from an earnings POV. Notable reporters include Berkshire Hathaway, Qualcomm, Novo, a range of semi/software/security names and a handful of energy names.

More Crypto:

• In 2023, the Bitcoin mining industry experienced a decrease in revenues and hash prices.

• Despite financial challenges, miners expanded their operations, leading to increased mining difficulties.

• The average cash cost to mine one Bitcoin rose from US$47,200 in Q1 to US$49,500 by Q2.

• Mining Bitcoin remains profitable based on current market prices, even with higher production costs.

• When accounting for depreciation and stock-based compensation, the total cost to produce one Bitcoin reaches approximately US$96,100.

The largest stablecoin by market cap, Tether, stands at $120 billion, having surged from $90 billion at the start of 2024. However, the rate of this increase has slowed dramatically since the beginning of the month. The 60-day change in market cap has fallen below $3 billion for the first time since August after a peak of over $12 billion in late April.

As seen in the chart above, the U.S. Dollar Money Supply (M2) has consistently increased across presidential terms, influenced by significant events such as the COVID-19 relief measures during Trump’s term. With the 2024 presidential election nearing, Bitcoin has emerged as a significant topic, shaping political discourse and campaign strategies. 

Key Observations and Election Implications:

U.S. Dollar Money Supply Growth:

• Persistent growth across administrations from both major political parties.

• Sharp increase during Trump’s late term due to pandemic relief efforts.

• Slowed under Biden in 2022 amidst inflation pressures, with subsequent resumption.

2024 Presidential Election and Bitcoin’s Role:

• Unprecedented focus on Bitcoin as a major election issue.

Trump’s Pro-Bitcoin Promises:

• Plans for a Strategic Bitcoin Reserve.

• Advocacy for mining-friendly regulations.

• Promises of more favorable SEC policies and the removal of Choke Point 2.0.

• Pledge to pardon Ross Ulbricht immediately.

• Support from Bitcoin-savvy advisors like Vivek Ramaswamy and Robert F. Kennedy Jr.

Kamala Harris’s Position:

• No explicit Bitcoin policy details.

• Mark Cuban speculates she might replace SEC Chairman Gary Gensler.

Potential Outcomes and Industry Impact:

• Risk Factor: Bitcoin’s adoption is heavily impacted by government fiscal responsibility.

• Trump Victory: A Trump win could place Elon Musk in charge of government efficiency.

• Elon Musk’s Efficiency: Known for cutting inefficiencies at Twitter, Musk’s approach could extend to government spending.

What Happened This Week:

• Immutable has disclosed that it has received a Wells Notice from the SEC regarding possible securities law violations involving $IMX.

• BlackRock’s Bitcoin spot ETF, IBIT, has surpassed $30 billion in assets under management, 293 days after launch.

• Canary Capital has filed an application for a Solana Spot ETF with the SEC.

• Visa and Coinbase have announced a partnership to support cryptocurrency deposits and withdrawals via debit card.

• The Russian government has enacted a new law to regulate bitcoin and cryptocurrency mining activities. 

What to Look Out For:

• Mt. Gox wallet has started moving after a long time. Mt. Gox transferred 500 $BTC (~$35.04m) to two unmarked addresses.

• Franklin Templeton’s OnChain U.S. Government Money Market Fund can now be traded on Coinbase’s Base blockchain.

• Nexo has announced its rebranding from a lending platform to a digital asset management platform.

• MicroStrategy announced its “21/21 Plan” and said it would raise $21B in equity issuance and $21B in bond issuance over three years, totaling $42B to invest in Bitcoin.

• FTX settles with Bybit to recover $175M in digital assets and sell $53M worth of BIT tokens. Court approval is pending, with a hearing scheduled for Nov 20th.

What we enjoyed reading and listening to:

• 2024 CEX Listing Performance — Link

• Unlocking New Frontiers in Autonomous Dapps — Link

• The Blockchain Payment Landscape — Link

• US Treasury says stablecoin growth is increasing demand for T-bills — Link

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