Bitcoin price is approaching $70,000 and two catalysts see that this increase will continue and is expected to surpass its All-time high of $73,815. Until Sunday, October 20, Bitcoin rose almost 10%. Bloomberg and CryptoQuant saw something interesting about this price increase phenomenon.
Bloomberg noted that there was a net inflow of almost $2.4 billion over the past 6 days until October 18 to the Bitcoin spot ETF. From experience, the increase in net inflows in early 2024 had helped Bitcoin price to reach its all-time high on March 14, 2024 at $73,815. The increase in net inflows this time is also believed to bring a higher increase that will bring Bitcoin up to break its previous record high.
The inflow to the Bitcoin spot ETF was seen by Bloomberg as the influence of sentiment brought by the US election which will take place on November 5. Optimism came because Republican candidate Donald Trump was clearly pro-bitcoin and therefore if elected, crypto regulations in America would be relaxed. In contrast, Democratic Candidate Kamala Harris has promised to impose stricter regulations on cryptocurrency trading in America.
Observations from CryptoQuant suggest bullish sentiment signals on Bitcoin after seeing Bitcoin reserves on exchanges reach a new All-time low as of October 18, 2024. CryptoQuant as a blockchain analytics data provider saw exchanges have bitcoin reserves falling from 3,065,330 BTC on January 26, 2024 to 2,679,486 BTC on October 18, 2024. This means there has been a decrease of around 385,844 BTC, which is equivalent to around US$26,564,028.63 at the price when this article was written. This drastic downward trend is always followed by an extreme increase in the price of Bitcoin. Conversely, if there is an increase in the amount of Bitcoin reserves on exchanges, it indicates high selling pressure.
Bitcoin reserves on exchanges refer to the term for the amount of Bitcoin held on crypto exchanges for trading purposes. So before someone can trade Bitcoin, they must transfer it from a personal wallet to an exchange. This way they can sell it to the market whenever they want.
The decrease in Bitcoin reserves on crypto exchanges implies that many people are moving their Bitcoin to private wallets and do not plan to sell it anytime soon. Meaning that most people carry the expectation that the price of Bitcoin will increase in the near future.
Several companies could potentially gain benefit from Bitcoin's hype:
- Bitcoin Mining Companies: As Bitcoin's price rises, the crypto mining companies will surely generate revenue from mining new Bitcoin. For example Marathon Digital Holdings (MARA, Financial), and Bitfarms Ltd. (BITF, Financial).
- Cryptocurrency Exchanges: Volatility on the crypto hype will benefit companies that operate cryptocurrency exchanges, like Coinbase Global (COIN, Financial), Binance, and Kraken will see more fees from higher trading volume
- Chip Manufacturers: With higher-than-usual trading volume, companies with advanced chips will see demand increase for crypto mining and transaction activities, so companies like Nvidia (NVDA, Financial) and AMD (AMD, Financial) could benefit from Bitcoin rises.
