Welcome to the 60th issue of the Broker’s Beat. This week, we’ve got reports saying that the chances of Bitcoin ETF for the futures approval is around 75%, and as long as no negative news breaks out, we should expect a rally in October.
BY THE NUMBERS
Bitcoin mining difficulty rose to the hardest since June
“Bitcoin miners saw another mining difficulty adjustment on Tuesday, with an increase of 4.71%, according to data from BTC.com.”
Canadian Bitcoin mining firm Link Global faces $5.6M penalty
‘Link Global Technologies, a Bitcoin (BTC) mining company listed on the Canadian Securities Exchange, is facing major potential penalties for operating unauthorized power plants in the province of Alberta.”’
Volcanoes and Lightning: Here’s how El Salvador is brewing up a storm
Source: AMB Crypto
“Mining Bitcoin with volcanoes sounds like a sci-fi plot device to most. Yet, the world has been entranced since El Salvador’s President Nayib Bukele released a teaser video suggesting that the first steps were already in motion for the same. “
Marathon Digital, Hut 8 Mining Building up Bitcoin Reserves
“Two of North America’s largest bitcoin miners, Marathon Digital and Hut 8 mining, are choosing to hold the bitcoin they are producing, and one is now borrowing against its bitcoin to purchase mining equipment.”
Sino-Global Shipping Partners With Highsharp for New BTC Mining Machine
“Sino-Global is going to fund, in a joint-venture with Highsharp, the design and construction of what is called the Thor Bitcoin Mining Machine.”
Despite all of the panic from last week’s dip in Bitcoin price, we did not see a break below $40K. Instead, the BTC/USDT price surged upwards from $40K on Sept. 30, 2021, and broke above $55K as of yesterday Oct. 6, 2021. There’s a shift in sentiments to the bullish side as we head into the end of the year. Let’s study the Bitcoin netflow charts between exchanges over the past week.
When we study the BTC netflow chart for all exchanges shown above, we can see that the netflow value reduced from 1.5K to 0.4K between Oct. 2 and Oct. 6 2021. Since the Bitcoin netflow value measures the relative amount of BTC inflow to outflow, this reduction means that there was more BTC outflow than inflow into exchanges’ wallets. Therefore, more traders were willing to hold on to their BTC and there was a reduced supply of BTC for trading in order to purchase alt coins.
The outflow chart for all exchanges also projects a similar situation as shown above. As the BTC spot price increased between Oct. 2 and Oct. 6 2021, we can see a significant increase in the BTC outflow value from 17.9K to 42K. An increase in Bitcoin outflow from exchanges’ wallets to external wallets implies that there’s a reduced selling pressure for BTC. Therefore, this means that during this period, less traders were willing to trade out their BTC holdings for alt coins purchase.
Just as we predicted in last week’s issue of The Broker’s Beat, the Bitcoin hash rate value has increased from its previous value of 139 TH/s on Oct. 2 2021 to 149 TH/s on Oct. 6 2021. We can see this from the total hash rate chart shown below.
Concurrently, the bitcoin network difficulty has also recovered significantly since late July 2021 as shown in the chart below. We can see an increase in the network difficulty value from 13.6t on July 28 to 19.8t on Oct. 6 2021.
Both of these metrics prove that we’re on the path to pre-China crypto mining ban operation levels. With the massive push for ‘green’ Bitcoin, there is hope that the recovery of the hash rate and network mining difficulty will continue towards the end of the year.
The month of October is starting off on a bullis note for Bitcoin and the crypto space in general. Just last week, we speculated that the BTC/USDT chart would see a significant increase in spot price levels provided it holds the $40K support level. As at yesterday Oct. 6 2021, BTC broke a major resistance level at $55K. The last time we saw Bitcoin at this price was May 11, 2021 and bullish experts believe we’re yet to reach the peak of this current bull run. As BTC surges above the $55K resistance level, it has now returned to its previous $1T market cap value asset alone, pushing the total crypto market cap value to its current value of $2.3T.
Let’s discuss some major events that have the potential to decide the direction we’re headed during this fourth quarter as we progress towards the end of 2021.
First, it would seem that more whales are really pushing for the approval of a Bitcoin ETF for the futures market this October. Reports suggest that there is a 75% probability that the SEC approves this in October 2021. While some analysts believe that things are likely to get significantly better in the crypto space if this goes through, others like Eric Balchunas from Bloomberg are less confident about that but stated that it will be a ‘big step nonetheless’. We are confident that the recent increased demand for Bitcoin is due to the anticipation of the imminent approval of a BTC futures ETF.
Institutions continue to adopt cryptocurrency as US Bank announced on Tuesday Oct. 5 2021 that it has launched a cryptocurrency custody service. At the moment, this service only caters for BTC and LTC and is expected to accommodate ETH in the near future. As institution adoption by surveys, fintechs, new exchange-traded products and more banks continue to rise, we can expect peak retail FOMO at the same time. There is the possibility of reaching a super cycle where BTC spot price may start to approach $100K as proposed by bull analysts. We expect a rally during this October and unless a piece of major negative news breaks out, both BTC and alt coins may begin to retest previous all-time highs. Analysts believe that the $50K level has now flipped and is the new support level going forward in the short term.
That’s all for this week! If you have any questions about what we talked about here or would like to explore trading with us, let’s get the conversation started.
The Secure Digital Markets Team