Reports

Bitcoin Fundamentals Report #313

Rumors of major buyers entering the market, bitcoin price spike and analysis for the near term, institutional FOMO, Trump ripple effects, and more.

November 11, 2024 | Block 869,8,97

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Snapshot of Bitcoin

General Bitcoin
Weekly trend	Godzilla Candle
Media sentiment	Very Positive
Network traffic	Increasing
Mining industry	Stable
Price Section
Weekly price*	$88,158 (+$20,354, +30.0%)
Market cap	$1.744 trillion
Satoshis/$1 USD	1135
1 finney (1/10,000 btc)	$8.80
Mining Sector
Previous difficulty adjustment	+6.2444%
Next estimated adjustment	+0% in ~7 days
Mempool	91MB
Fees for next block (sats/byte)	$1.85 (15 s/vb)
Low Priority fee	$1.72
Lightning Network**
Capacity	5171.85 btc (-0.2%, -60)
Channels	47,165 (-0.5%, -254)

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Microstrategy Makes Another $2B Bitcoin Buy

Wasting no time in their plan to buy $42B in bitcoin in 3 years, Microstrategy launches a $2B buy on Friday and into the weekend.

The addresses of this new purchase have yet to be identified, but there are rumors that they were buying last week and not over the weekend. However, Saylor did tweet over the weekend that people needed to update their charts showing their bitcoin buys.

Bitcoin ETFs Continue To Hoover Up Available Supply On the Market, Surpass Gold In A Couple Interesting Ways

Blackrocks Bitcoin ETF is 10 months old and has just surpassed their gold ETF that's been around for almost 20 years.

In addition, Bitcoin ETFs are now approaching $26B in net inflows within their first 10 months—a figure higher than any single year for gold ETFs. Note that the chart below is outdated, as the total orange bar should be significantly higher. Interestingly, gold ETF inflows grew consistently during their first six years. What if Bitcoin ETFs follow the same trajectory?

Jason Lowery is back with a Bitcoin National Defense Proposal

Jason Lowery is the Researcher in the US Space Force that wrote Softwar: A Novel Theory on Power Projection and the National Strategic Significance of Bitcoin, which has since been removed from sales by the federal government. This week, he dropped these policy recommendations for the new administration.

Wall Street Insider Bernstein Tell Clients To Add Exposure to Bitcoin ASAP

Something is brewing under the surface in bitcoin. Last week, there were HUGE inflows into the ETFs with a record day hitting $1.3 billion. Then Microstrategy buys $2B at an ATH. Rumors are swirling about nation state FOMO. Adding to the frenzy, Bernstein, a prominent Wall Street firm, advised clients: "Don't fight this. Buy everything you can."

Macro

Trump Wins US Election in Massive Mandate, Immediately Sets to Work

Trump was the first Republican to win the popular vote in 20 years, and the first populist conservative to every win the presidency or the popular vote. While the results were somewhat close, many analysts believe current election rules heavily favor Democrat candidates and voters. In a uniformly fair election, my belief is that populists would win by a 60/40 margin.

This election's domestic and global economic impacts cannot be overstated. It is a pro-US vote, and signals a return to isolationist economic and military policy—a sharp contrast to the "New Deal" policies of FDR. FDR was a progressive populist and got many progressive projects passed in his day. I've described the coming 4–12 years as a "Reverse FDR" era, with promises to:

End the income tax
Shrink the bureaucratic state
Move toward a Bitcoin standard

Houthis and Qatar Immediately Behave

Upon the election of Donald Trump, the Houthis immediate ended their involvement in the wider Middle East conflict. Qatar has followed suit. They have now order the top Hamas leaders that were staying in Qatar under their protection to leave.

Powell Press Conference Drama

During Thursday's FOMC press conference, Chairman Powell was asked if he'd step down if requested by the President. His response was blunt: "No." Asked if a president has the power to remove him, Powell reiterated: "No."

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While some tension between Powell and Trump is expected, they are likely aligned for the next year. Powell has 18 months left in his term, and the Fed is expected to cut rates—a move that aligns with Trump's goals. The only question is the pace of these cuts.

China BRICS Currency is USD denominated bonds

We are constantly fear-mongered into thinking the US dollar is in imminent danger of losing its reserve currency status. One of the biggest theories over the last couple of years has been that the BRICS nations are going to launch a dollar killer currency. I've laughed at this idea calling it a "basket of basket case currencies."

This week, the irony hit headlines: China is selling bonds to Saudi Arabia—but denominated in US dollars. What a joke.

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Bitcoin Charts

Last week:

Overall, this pre-election pullback has been larger than expected but does not threaten to go much lower. The election appears favorable for a pro-Bitcoin Trump victory. Price remains above key levels, with the bullish trend intact. Cycle timing suggests a significant move over the next 100 days. Additionally, we have a Fed rate cut that should prove bullish for the bitcoin price, as well.

I have also been preaching for years that advancement in price will happen very quickly. We've watched this trend develop over the last 5-6 years, were price rallies in relatively short periods of time, followed by a lengthy consolidation or correction. We are in the expansion phase right now.

This kind of price movement does not allow fence-sitters to jump in late or try to time the market. Gains are, therefore, disproportionate to long-term holders who have an established position and belief in bitcoin.

There are serious rumors of sovereigns currently taking a position. They are unsubstantiated, but second-hand sources are all similar in this regard. We cannot know if they are interpreting high-level officials' comments correctly. Perhaps, sovereigns are taking an interested look into bitcoin, with one or two vocal promoters inside these governments, but that is being interpreted by a leaker as a done deal. We just don't know yet.

The circumstantial evidence supports at least one very large buyer coming in the market. Whether that is only MSTR (discussed above) and a couple pension funds getting a 1% exposure or something more serious, we'll have to let develop.

I need to urge caution. Do not open leveraged longs at this point. Narratives explaining this price rise are likely, at most, only partially true, and price can retrace a one day move easily. Buying dips of 20-30% and keeping any leverage low is a reasonable plan.

Behavior Above an ATH

Many of you might have never seen an ATH if you are new this cycle. Welcome.

Above the ATH, liquidity tends to vanish, at least at coordinating price points around which resistance and support can coalesce. This causes the ability for the price to slip higher, but also retrace rapidly during corrections.

Is this a move from a new powerful buyer or just part of the cycle? This question needs to be taken seriously by traders and investors when considering risk and allocation decisions above the previous ATH.

If we look at the chart below, the price is EXACTLY where it should be on the most simplistic analysis from cycle bottoms; no nation state buyers needed. Again, perhaps it is only our bias making us believe it has to be some sort of sovereign. One thing is for certain however, it is not retail YOLO traders. They haven't arrived yet. We still have that to look forward to.

The price is absolutely ripping right now, even since I started writing this price section. We are officially up more than $10,000 in two days. In the short term, the rapid phase is likely over. Even with a sovereign buyer, price will not simply continue up like this for several more days. Once they have filled their orders, price will pause, and maybe retrace some of the move. People late to the party will long at the top and get squeezed the other way. Careful out there.

Overall, I'm not calling a top at the current price of $87,500, we could reach $95k-100k this week, but the risk of a correction is already elevated. If we go straight to $100k, the likelihood of a very significant pull back becomes very high. At that point, a brief drop back to $80k would not be surprising at all. The most likely scenario right now is for the immediate impulse to cool here around $87k, and trickle upward for a week, similar to October 2023 on the chart above.

Whatever happens this week, the rally into the end of the year is looking very solid. The weekly chart is in beautiful shape, telling us we are just at the first part of a major move higher.

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Headlines

Due to time constraints the heavily emphasis on the General Headlines and Price, there are no mining headlines today.

Hash rate and Difficulty

Bitcoin's hash rate has recovered from last week's brief dip and with this week's price action, we should expect it to increase rapidly over the next few weeks.