Analyzing Weekly Trends and the ETF Wait Game

Over the course of the week ending 8/27, the Bitcoin market saw some dramatic changes. Bitcoin settled around $26,000 last week, slightly outpaced by the S&P 500 and Nasdaq, which registered a week-over-week increase of 0.8% and 2.3% respectively. What caught the eye of many investors, however, was the contrasting stagnation of Bitcoin prices last week, reminiscent of the time prior to the filing of BlackRock’s spot Bitcoin ETF application.

Today, Bitcoin prices finally surged by 7%, currently trading at $27,851 as of writing following Grayscale’s lawsuit victory against the SEC. 

Imminent Spot BTC ETF Advancement: Gearing BTC for a Leap?

Investor optimism is brewing over the potential approval of a spot BTC ETF in the foreseeable future. Should the ETF be greenlit, it would likely bolster BTC prices above $30,000—a potential recovery trajectory.

This week, the SEC is looking to issue its response on the spot BTC ETF filings from seven asset managers. The first among these is Bitwise Asset Management’s filing expected on 9/1, closely followed by BlackRock’s on 9/2. 

After the delay surrounding the decision on the Bitcoin ETF application by 21Shares/Ark earlier this month, it wouldn’t come as a surprise if the SEC adopts a similar stall tactic for the other filings due this week. 

An important highlight is today’s court ruling favoring Grayscale against the SEC’s previous rejection of Grayscale’s application to convert its Bitcoin trust into an ETF. This development could potentially expedite the timeline for the approval of a spot BTC ETF.

Regardless, the SEC is clocked with a maximum of 240 days to approve or reject an application after it’s added to the federal register, with the deadline for 21Shares/Ark’s application approaching on 1/10/24. 

Analyzing the Undercurrents: BTC Mining and Industry Trends

Over recent months, a shift has been observed in the active Exahash per second (EH/s) rates, indicating variations in mining power. In June, the industry’s combined EH/s was 6.1, which slightly increased to 6.4 by July, indicating a rise in mining activity.

This surge in mining activity has not necessarily translated to an equivalent boost in Bitcoins mined. A closer look reveals that in June, on average, 374 Bitcoins were mined, which saw a minimal rise to 391 in July. The data suggests a significant amount of the mined Bitcoins are being reserved, with an average of 3,175 Bitcoins currently held in reserve across miners.

In July, a majority of the miners sold a significant portion of their June production. For instance, while Core Scientific sold all of its production, Marathon Digital Holdings retained about 36% and sold the rest. 

The value of these Bitcoin holdings, when assessed at the current price of $27,850, is substantial. For instance, Marathon Digital Holdings’ BTC holdings translate to a market cap of $360 million.

Final Observations: Gleaning From the BTC Metrics

The Bitcoin Network hash rate, an indicator of the computing power of the entire network, has witnessed consistent growth. Since December 2021, there has been a marked upward trajectory, doubling its value. Such an increase indicates heightened activity and interest in the Bitcoin mining sector.

Additionally, the Bitcoin Network difficulty rate, which was hovering around 25 trillion in December 2021, escalated to 55.62 trillion as of last week. This surge suggests increased competition among miners to find new blocks, making the network more secure.

Another curious observation is the correlation between the Bitcoin hash price and the BTC price. Their trajectories are strikingly parallel, hinting at a possible correlation. But the mystery remains: Is the hash price driving the BTC price, or is it the other way around?

The Bitcoin market has seen various shifts in recent times, from price fluctuations to legal victories. The spotlight remains on the potential approval of spot BTC ETFs and the consequent influence on Bitcoin’s market position. Meanwhile, mining trends and industry metrics continue to provide valuable insights into the evolving dynamics of the cryptocurrency sector.