Welcome to the inaugural edition of the Bitcoin Weekly report by M6 Labs, your guide to all things related to the crypto pioneer, Bitcoin! This report aims to keep you informed about the market leader and its significance.

Understanding Bitcoin's status can help you make informed decisions, whether to time your investments, explore high-beta assets, or manage risk during Bitcoin's cooldown periods. Many crypto veterans hold substantial Bitcoin holdings for a reason. Beyond its market leadership, the Bitcoin ecosystem is evolving, and developments within it are worth monitoring. 

In the coming years, Bitcoin will undergo significant changes and become a hub for activity and development. Let's begin our exploration!

Bitcoin Metrics

Checkmate succinctly summarizes where this is all heading.

TLDR

• Bitcoin received $312M in inflows last week, with short-sellers reducing their positions, and Canada and Germany contributing the most inflows.

• Bitcoin velocity is at historically low levels, indicating a preference among investors for long-term holding.

• The Purpose Bitcoin ETF hit a record high of 34,263 BTC in holdings, reflecting growing demand for accessible Bitcoin investment options.

• The number of Plankton Cohort addresses (holding < 0.01 BTC) has reached a record high of 37.5 million, while unique BTC addresses have doubled in six years.

• Long-term Bitcoin holders (LTHs) now hold nearly 15 million coins, while short-term holders (STHs) have decreased to their lowest level since 2010.

Last week, digital asset investment products experienced significant inflows of $346M, the largest in a nine-week streak, primarily driven by anticipation of the spot ETF launch. This surge in inflows pushed total assets under management $45.3B, the highest in over a year and a half. 

Bitcoin received inflows of $312M last week, bringing year-to-date inflows to over $1.5B. Short-sellers continue to reduce their positions, with outflows totaling $0.9M for the third consecutive week. Canada and Germany contributed 87% of the total inflows, while the US, presumably awaiting the ETF launch, only saw $30M in inflows.

Bitcoin velocity has reached historically low levels, indicating a sentiment among investors to hold the asset long-term rather than trading it frequently, according to analysts. 

Bitfinex observed this contrast between the current Bitcoin velocity and the average during the 2018-2019 crypto bear market. This low velocity suggests that digital asset holders are reluctant to sell, while buyers actively seek new supply. 

Standard Chartered Bank maintains its forecast that Bitcoin will reach $100K by the end of 2024, with the potential catalyst being the approval of U.S.-based spot Bitcoin ETFs, which they believe may happen sooner than expected. Bitcoin's dominance in the digital asset market has also increased to 50% from 45% in April.

Recent trends in Bitcoin futures, particularly on the Chicago Mercantile Exchange, have shown significant growth and market activity, indicating a heightened interest from investors. 

• Increase in Open Interest: The open interest in CME’s standard BTC futures has seen a considerable increase of 35% in just four weeks, reaching 19,603 contracts, which is equivalent to about $3.4B​​. This surge in open interest is a strong indicator of growing investor interest in Bitcoin futures.

• Growing Institutional Interest: The increased activity in CME Bitcoin futures is indicative of a broader trend within institutional circles. The trading of these futures at a premium compared to Coinbase's spot price, along with the escalating open interest, suggests a potential uptick in Bitcoin's valuation shortly​​.

• Competition in the Futures Market: The open interest in Bitcoin futures on the CME is challenging the dominance of other major players like Binance in the futures market landscape. With a 33.5% increase since October, the open interest in CME Bitcoin futures has surged to $15.83B, signifying bullish momentum and marking a new competition for Binance​​.

The Purpose Bitcoin ETF has seen a remarkable increase in its holdings, now standing at 34,263 BTC, marking a record high in 2023. Over the last 47 trading days, a substantial 40 of them have witnessed inflows, indicating sustained positive momentum. 

• Launched in February 2021, BTCC was the first Bitcoin ETF approved by regulatory authorities, offering a more accessible, regulated, and secure investment option in Bitcoin. This ETF enables investors to buy shares representing exposure to real Bitcoin without dealing with the complexities of purchasing and storing the cryptocurrency directly​​​​.

• The success of the Purpose Bitcoin ETF indicates a growing demand for more accessible investment avenues in Bitcoin and other crypto. This trend is expected to continue with a push for more crypto ETFs by financial institutions and regulatory bodies. Spot Bitcoin ETFs, in particular, will be the next significant step in connecting mainstream investors with the crypto landscape​​​​.

Similarly, the Grayscale Bitcoin Trust (GBTC) has displayed significant growth, with a year-to-date increase of 280%. As of November 24th, GBTC trades at an approximately -8.42% discount to its net asset value (NAV), which is the smallest discount observed this year. 

• This reduction in discount is reminiscent of a similar trend in mid-2021 when the premium flipped to a discount. Notably, just a year ago, in November 2022, the discount to NAV was much more significant at -50%.

Bitcoin's network is currently experiencing a phase of increased resilience and growth. The upcoming difficulty adjustment is set to exceed 5%, marking the sixth consecutive positive adjustment this year. 

• This streak in positive adjustments has only been seen once before, from December 2021 to February 2022. The recent surge in Bitcoin's hash rate, including the highest single-day hash rate recorded on November 19, reflects increased miner participation.

• This signifies a historic moment for the crypto, with the network's computational power now standing at an impressive 504.80 exahashes per second. 

• The significant increase in hashrate, precedes the highly anticipated halving event, which is expected to have a further impact on Bitcoin's value.

The Bitcoin ecosystem is witnessing a significant trend with a notable increase in the number of addresses categorized as Plankton Cohort (holding less than 0.01 BTC). 

• Currently, there are a record-high 37.5M addresses in this cohort, with a 30-day increase of 1.6M, one of the highest on record. 

• Additionally, the total number of unique addresses holding any amount of BTC has surpassed 50M, doubling over the past six years since November 2017 when it was half this number. 

Recent data analysis from Glassnode reveals a significant disparity between Bitcoin's long-term holders (LTHs) and short-term holders (STHs). 

• LTHs, those who have held Bitcoin for over 155 days, now hold nearly 15M coins, while STHs, holding for less than 155 days, have decreased to their lowest level since 2010, with 2.3M coins. 

• This trend corresponds to Bitcoin's price reaching $30K around 155 days ago and staying at that level for about two months. 

• The future trajectory will depend on whether LTHs increase their holdings or if a decline occurs due to those who bought at the local peak and sold during Bitcoin's dip to $25K in August and September.

Summary: With significant inflows into digital asset investment products, a record-breaking Purpose Bitcoin ETF, and historically low Bitcoin velocity indicating a strong preference for long-term holding, investors are demonstrating confidence in the market. 

The increase in Bitcoin's network resilience, the growing number of addresses in the Plankton Cohort, and the contrast between long-term and short-term holders further support the positive outlook. As we move forward, the market appears poised for continued growth and positive developments.

Bitcoin Ecosystem Update

The Bitcoin ecosystem continues to expand, with significant trading volume observed, especially with Ordinals. The recent launch of OKX's marketplace has propelled it to the top position, and notably, Magic Eden is also experiencing substantial volume, making it a favorite among users.

Ordinal's trading volume has reached a level comparable to that of traditional NFT marketplaces, signifying its growing prominence in the NFT space. Additionally, both Unisat and OKX's NFT marketplace have surged in popularity, securing positions within the top 5 rankings, highlighting the diversification and competition within the NFT ecosystem. 

Inscriptions experienced significant declines in trading volume during both August and October. However, it has since rebounded impressively, with trading volumes surging to reach new all-time highs. 

It's noteworthy that text-based content continues to dominate the usage of Ordinals over time. It will be fascinating to observe how these use cases evolve with potential upgrades, which may diversify the types of data and content being shared on Ordinals in the future.

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