Category: Research

This week five companies together bought 7697.3 Bitcoins worth $670 million. Out of these, The Blockchain Group and KULR Technologies are new players, while Metaplanet started buying Bitcoins in 2024 and Strategy (formerly MicroStrategy).

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1. KULR Technologies – 56.3 BTC

KULR Technologies, a leading lithium battery manufacturer has turned out to be one of the first hardware manufacturers to buy Bitcoin. This week, it has bought roughly 56.3 Bitcoins.

KULR has been buying Bitcoins since December 2024 when its corporate strategy gave permission to its executives to acquire Bitcoin with as much as 90% of its cash reserves. Since then, the company has utilized its surplus cash reserves to acquire as much as 668 BTC (incl. the latest purchase).

Previously, corporate Bitcoin buyers were limited to software, fintech, crypto, and finance.

2. Strategy (Michael Saylor) – 6,911 BTC

Strategy (formerly MicroStrategy) has emerged as a Bitcoin pioneer with its latest purchase of 6,911 Bitcoins. This purchase takes its total reserves to 506,137 Bitcoins valued at $44 billion. The company is not sitting on a 30% yield till date which is roughly $10 billion in just yield.

Michael Saylor is the original OG of Bitcoin buying with 509k Bitcoins bought to date and had financed the entire purchase on debt. In the crypto winter, he did not sell his Bitcoins despite sitting on a $1 billion negative yield.

MicroStrategy (now Strategy) did that and has been sitting on a $44 billion reserve that includes $10 billion in yield to date. It was the original pioneer of corporate Bitcoin buying in the world.

3. The Blockchain Group

French digital assets company, The Blockchain Group has spent roughly $50 million in buying 580 Bitcoins, taking its tally to 620 BTC. The player from France has emerged as the latest corporate buyer of Bitcoins.

4. Metaplanet Japan – 150 BTC

Metaplanet was a key pioneer in purchasing Bitcoins following the footsteps of Michael Saylor (and MicroStrategy) in 2024. The company has been raising funds to actively buy Bitcoins since the crypto markets are in a corrective mode.

Metaplanet bought 150 Bitcoins this week, taking its tally to a total of 3350 BTC. The purchase was roughly made at a price of $85k.

Upcoming: GameStop (Raising $1.3 bn)

GameStop announced its desire to raise $1.3 billion in preferred shares for its willingness to purchase Bitcoins. If the company successfully raises this amount within the first half of April 2025 assuming Bitcoin would still be around $90k, it would be buying roughly 14,444 Bitcoins.

We are still trying to find out why GameStop would need to raise funds to buy Bitcoins when it already has a $4.5 billion cash pile. Maybe this is the better way ahead: buying Bitcoins with borrowed assets, then paying off the debt or converting the money into shares.

Frequently Asked Questions

Several data points have emerged in the recent past that clearly shows Bitcoin’s 2024 rally is far from over. Data points from Rekt Capital, Ali Charts, Decentrader and Blockchain Lab confirms that Bitcoin is poised to climb much higher in 2024, than the levels that we see now.

Bitcoin Outside of Danger Zone

On May 02, 2024, Rekt Capital confirmed that Bitcoin was in a danger zone. This zone corresponded to a phase called post-halving consolidation where the macro-diagonal posed a strong resistance. The phase was indeed marked by high selling pressure and posed a risk for Bitcoin to fall down to $50k.

This zone was termed as the danger zone by Rekt Capital and is displayed in purple in the image below.

Finally with the selling phase being over, Bitcoin has now climbed above $60k, which now forms a strong support zone.

As per the Macro Diagonal theory, this marks the beginning of the resurgence zone which may extend to $90k. It is evident that after each Bitcoin halving there has been multifold returns. The graph below shows the exact percentage returns after each halving in 2012, 2016, and 2020.

Bitcoin Funding Rates Turn Neutral From Negative

Bitcoin funding rates have turned neutral from negative this week. Data from Decentrader shows that on May 05, 2024, funding rates have turned neutral marking the end of bearishness. Subsequently, these funding rates have now turned positive which shows resurgence in the markets.

#Note: Funding rate refers to the difference in Bitcoin Futures price and Spot price. If funding rates are positive, it means the market is bullish, and if they are negative, it shows a bearish market. The change of funding rates from positive to neutral marks the end of bullishness and change from negative to neutral marks the end of bearishness.

Don’t Expect A Parabolic Rally Now

Despite all bullishness, Bitcoin will mostly be under sideways pressure due to a few reasons.

1. Miner Sales

Miners still have around $5 billion worth Bitcoins that they might sell at the right moment, possibly during a rally. This selling might keep Bitcoin under pressure for a while. However, we expect the selling to stop by September 2024.

2. 90 Day Trailing MVRV Ratio

Historically, whenever MVRV ratio has dropped below its 90 day average, there has been a period of accumulation. This ratio has been used by traders to identify buy zones that ultimately lead to a rally. As of 08 May 2024, the MVRV ratio has just dipped below its 90 day average. See the below chart by Glassnode, shared by Ali Charts.

3. Decline in Open Interest

This factor is more of a short term one. The Open Interest has been in a decline since a month ago on 12th April. Both futures and options OI show the same pattern. Typically a reduction in OI with an increase in price shows short covering. Short covering rallies rarely last.

When Bitcoin moved from $56k-$60k between 1st and 3rd May 2024, it was more of a short covering rally since Bitcoin was leveraged at the $58k support zone.

On May 03, 2024, all major US Spot Bitcoin ETFs have recorded a net inflow. This has broken the streak of outflows for the previous 7 days. US Bitcoin ETFs had been witnessing continuous selling pressure due to recent volatility and sell offs by short term investors.

With BTC’s price falling below the average buying price for short term investors, their selling streak has come to an end.

Bitcoin ETFs Record Net Inflow of $378 million

Data by Coinglass shows that on May 03, 2024, all US spot Bitcoin ETFs have recorded a major inflows. This was the first net inflow in about 8 days. Prior to this, there was a net outflow from ETFs which resulted in a selling pressure as ETFs needed to sell their Bitcoins to allow user redemptions.

Although there were some net buying in the individual ETFs, yet the net outflow was hurting Bitcoin prices.

Grayscale Spot Bitcoin ETF Records First Inflow Since Launch

The Grayscale Spot Bitcoin ETF was born from Grayscale GBTC Trust. On the date of the approval of spot ETFs, the Grayscale ETF existed as the trust and had a size of $42 billion.

The availability of new Bitcoin ETFs at lower fees lured investors and the GBTC trust started losing funds at an alarming rate. However, 109 days after the launch of Bitcoin ETFs, the GBTC trust (now Grayscale Spot ETF) has seen a positive inflow of $63 million.

Despite all, the Grayscale Spot Bitcoin ETF still has the highest assets under management, i.e., $24 billion which is still much ahead of the second largest (BlackRock’s IBIT) which is at $17 billion.

Here is a comparison of top Spot Bitcoin ETFs by Blockworks.

#NOTE: In the US, ETFs are registered as legal trusts and the shares of these trusts are sold in exchanges as ETFs.

Reasons for Renewed Buying

Out of several reasons for a renewed buying in Bitcoin, we have identified the top most reasons.

1. Bitcoin’s price was suppressed mostly due to short term investors who might have exited after their BTC went below their buying price.
2. Quick recovery in Bitcoin’s price after $55k-$57k acted as a strong buying zone.

Failed Hong Kong ETFs

The Hong Kong Bitcoin ETFs failed to perform as the net inflows on the first day of the launch was a little above $8 million as compared to $4.6 billion inflows by US spot ETFs. Even on day 2, the inflows were a meagre $5.56 million vs 1.42 billion by US ETFs on their day 2.

Selling in Bitcoin and overall markets were severe in the last couple of weeks because of short term investors.

Due to a bull rally prior to Bitcoin Halving, and the lofty targets given by top analysts, several short term investors saw an opportunity to make some quick money.

However, by the time these investors entered the markets, the prices were already in the overbought zone. When these short term investors entered, the markets were ripe for a correction.

Geopolitical events like Israel-Iran conflict, US FED interest rates and profit booking triggered a sale in the markets.

Once selling gained momentum, the short term investors sold completely and most of them likely existed the markets. As soon as the price of Bitcoin went below the average purchase price of short term investors, the selling paused.

Bitcoin On Chain Data

A report by Glassnode shows that it is highly likely that these short term investors have exited the markets. The below image shows how short term investors with an average buying age of 1 week – 3 months have likely sold the most. The realized price for purchases done in the last 3 months were $62k.

Blockchain Lab Accurately Identified Buying Levels

This was also the support identified by us at Blockchain Lab i.e., $61.3k in the below chart. The reason why we thought the price would act as a support is due to 2 arguments.

1. Bitcoin’s price would not experience any severe fall due to Bitcoin Halving and due to the presence of Bitcoin ETFs.
2. Secondly, the trend lines showed that $61.3k was a very strong buying zone. This is why despite the fact that price went below this line, it immediately recovered.

Slow Price Recovery Ahead

Now that short term investors have likely exited the markets, the price of Bitcoin may jump to $66k. However, we do not expect any large rally to extend unless the resistance at $72.3k is taken out.

The presence of a huge BTC holding with Bitcoin miners could also keep prices suppressed for a while in the next few months.

In the last 24 hours starting 8 a.m. UTC on 30th April 2023, we saw a continuous fall in Bitcoin’s price from $63,200 to $57,165. The immediate reasons seemed to be Bitcoin ETF outflows, lackluster debut of Hong Kong Spot Bitcoin ETFs, miner sales and general bearishness in the markets.

In the last few days, there has been severe consolidation in the broader markets which have left investors and traders confused as to what should be done next. In this article, we use on-chain data, fundamental metrics and technical charts to understand what could be the best course of action for the near foreseeable future.

Bitcoin Outflow Intensifies

US Spot Bitcoin ETFs had seen a major outflow in the last day i.e., 30 April 2024. There was $3.60 million in inflows and total outflows stood $165.20 million. at causing a net outflow of $161.60 million.

The only Bitcoin ETF with any inflow was ArkInvest which saw $3.60 million of inflows.

The individual outflows in and out of major Bitcoin ETFs are:

• GBTC -$93.2 million
• FBTC -$35.30 million
• BITB -$34.30 million
• BTCO -$2.40 million

Other major Bitcoin ETFs did not see any outflows but also had zero inflow.

A look at the trend of Bitcoin ETF flows shows that after mid-march the markets entered a profit booking mode. Net inflows slowly dropped to zero and outflows began. Still, the outflows are not as severe as they could have been, thanks to the reduced supply of Bitcoin after halving which seems to have held the price.

Lackluster Debut of Hong Kong ETFs

The Hong Kong ETF failed to attract investors in the Asian markets. On the first day of debut, April 29th, the net inflows were at $8 million as compared to $4.6 billion in US Spot Bitcoin ETFs on their first day.

The lackluster performance can be attributed to the following figures:

• Market trends
• Bearish market sentiments
• Excess of Bitcoins in the market
• Availability of spot ETFs in the US which is one of the primary demand sources for Bitcoin
• The crypto crackdown in China in the past

Among all reasons, we believe that the crypto crackdown in China that took place around September 2021 could be a major reason for holding investors back.

Main landers(people from mainland China) comprise a major chunk of general as well as investor population in the Hong Kong. The increase in main lander investors within Hong Kong rose majorly after the post-covid housing crisis in mainland China.

A report by Nikkei Asia shows that 80% of inflow of people that settled in Hong Kong were from Mainland China. A special policy of “one-way permit” allows Chinese mainlanders to settle in Hong Kong along with their families.

Since most of them have connections that tie them back to mainland China, they might get hesitant in investing in Bitcoin or any cryptocurrencies even in the form of ETFs.

Miner Sales and General Bearishness

Bitcoin miners might be forced to sell their mined Bitcoins to cover operational costs as well as to realize some profits.

As per an estimate by 10x Research, miners could have been sitting on $5.2 billion worth of Bitcoins. The same report indicates that the miner holdings are alone sufficient to keep prices suppressed in the coming 6 months.

The miner sales would not have been these worse if the general market trends had been a little better.

The markets witnessed a net fall in Bitcoin’s price in April 2023. After starting near $69k, the markets corrected for the first week. A relief rally in the second week failed after Bitcoin couldn’t cross $70k.

Bitcoin Charts Looks Severely Bearish for May 2024

As on 1 May 2024, Bitcoin’s price crashed 8% on a single day, falling to $58k.

A look at the daily charts signal that prices may fall further.

After a failed test of resistance at $73.2k, Bitcoin priced had found support between $61k-$62k. However, on May 01, 2024, the price also broke down below this support. Now the next support seems at $50.6k.

Option Data Confirms Bearishness

Options data for Bitcoin shows that the markets are severely bearish. At a put/call ratio of 0.5, the markets are far more bearish than any time in 2024.

Put/Call ratio is the comparision between put options (which signal bullishness) and call options (which signal bearishness). Ratio above 1 shows that the markets are bullish and if below 1, they indicate severe bearishness.

Disclaimer: The above analysis is from an educational perspective and should not be taken as financial advice.

On 20th April 2024, UTC 12:09 am, the Bitcoin network reached a block height of 840,000 and this triggered the Bitcoin Halving event. This reduced the Bitcoin block rewards from 6.25 Bitcoins per block to 3.125 Bitcoins per block. However, there was also a four fold increase in Bitcoin’s block rewards as compared to the third halving event.

Now that the Bitcoin Halving event has completed. Its finally time to assess what lies ahead now. Turbulent markets, macroeconomics and troubled geopolitics seem to present a lot of challenges ahead.

Facts About The 4th Bitcoin Halving

• Old Block Reward was 6.25 BTC per block.
• New Block Reward at 3.125 BTC per block.
• Timestamp for the 840,000th block was 12:09 am UTC on 20th April 2024.
• Price of Bitcoin at halving was $63,984.
• Next (fifth) estimated Bitcoin halving date between Feb 4th and April 17th, 2028.

Now that the fourth Bitcoin Halving has finally completed, its time to take a look at what happened and assess what lies ahead.

The halving event took place at 12:09 am UTC on Saturday 20th April 2024 (19th April for the Americas).

The new block rewards is at 3.125 Bitcoins per block as compared to the old block reward at 6.25 Bitcoins per block. However, there is an increased payout. At the 3rd Bitcoin halving, the price of Bitcoin was at $8618 which means a block reward was valued at $53,862(6.25 BTC x $8618). This increased to over $200k (3.125 BTC x $63,984) after the 4th Bitcoin halving.

Bitcoin’s Price to Get 3 Setbacks After The Halving

First Setback: Miners Selling Bitcoins

It is expected that around $5 billion worth of Bitcoins might be sold by the miners. The Bitcoin miners have been sitting at their miner rewards since quite a long time. Now that block rewards are half (3.125 BTC per block), some of them might be forced to sell their Bitcoin holdings.

As per 10x Research this selling might keep Bitcoin under pressure for the next 6 months.

Second Setback: US Government Selling $2 Billion worth Bitcoins

Another seller who is ready to sell their Bitcoins is the US Government which is estimated to hold roughly $14.7 billion in cryptocurrencies. Out of this, approximately $2 billion worth of Bitcoins have already been moved to Coinbase on 2nd April 2024 for selling in the open market.

As per Arkham Intelligence, the government funds were those which were seized from Silk Road, a darknet website founded by Ross Ulbricht (now jailed).

Third Setback: ETF Outflows

A third setback would be the slowdown in the Spot ETF inflows. Since, their launch, spot ETFs have seen very generous inflows to the tune of $300 million per day. The highest halving recorded till date was on 12th April 2024 when Bitcoin’s price achieved its first all time high in 2024 (previous one was on November 10, 2021).

However, the inflows had stopped prior to the having. You can see the chart below to get an idea of Spot ETF inflows and outflows.

Bad Macroeconomics to Hurt Bitcoin

The US Federal Reserve has clearly suggested that they might not cut interest rates in their next meetings. Fed Chairman Jerome Powell said that the recent readings in US inflation was hotter than expected and this would make it difficult to cut rates in the near future.

Also pointing towards the recent growth data, he said that there were not sufficient steps taken towards achieving the 2% inflation target. Clearly by steps, he meant there could be more rate cuts or neutral policy decisions in the next few FED meetings.

Currently, the US inflation rate is at 3.5%.

The dependence on US inflation and interest rates lies because most of the Bitcoin buyers hail from the USA. Also, the US Spot Bitcoin ETFs far outweigh their global competitors in Assets Under Management (AUM).

Geopolitical Tensions Might Cease Soon

The Iran-Israel conflict seems to have ended for now. The conflict was a major cause of Bitcoin’s fall in price from $65k to $60k a few days ago.

Wars and conflicts typically serve to reduce the market’s appetite for fresh buying.

Fifth Bitcoin Halving Estimated Between 4th Feb 2028 and 17th April 2028

The next Bitcoin halving which will further decrease block rewards from 3.125 BTC to 1.5625 BTC is expected to happen between the 4th of February 2028 and 17th of April 2028. This is considering the average time between Bitcoin blocks to be between 9.5 to 10 minutes.

Price Analysis

After touching a low of $60k, Bitcoin has now bounced back taking $61k as its new support zone. However, there is a resistance near $73.2k.

A move above $73.2k would signal a price rally towards $80k followed by $100k. However, we expect the second target of $100k only to materialize towards the end of the second half (Nov-Dec) of 2024.

A move below $61k would signal a breakdown in prices and Bitcoin might move rapidly towards $50k-$52k which would be a strong buying zone and hence a strong support.

Disclaimer: This analysis is for educational purposes and should not be considered trading advice.

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