Bitcoinminingdifficultyjustsetanewrecord,hittingheightsthatareforcingminerstothrowevenmoreresourcesatthenetwork.
WithcompetitionheatingupandBitcoinholdingsteadynearitsall-timehighs,theindustryfacesnewpressures.Nowminersneedevenmorecomputationalpowertokeeppace,leadingtohighercostsandpotentiallystrainingthesystem’ssustainability.
Minersaren’tjustdealingwithnewdifficultylevels.Bitcoin’srecentpriceactionhasthemscramblingaswell.Asdemandrises—largelydrivenbyETFpurchases—miningcompetitionisclimbing,butsoareexpenses.
Andtransactionfees,whichoftenhelpcoverminingcosts,mightnotbeenoughtooffsettheserisingexpenses.That’scausingsometowonderifthisspikeindifficultywillstartcuttingintoprofits.
ETFdemandanditsroleinBitcoin’spricesurge
Bitcoinhasbeentradingwaytooclosetoitsall-timehighrecently,andthepushfromU.S.-basedETFsisabigpartofthat.SinceearlyOctober,ETFactivityhasspikedsignificantly.Atthebeginningofthemonth,netdailyETFpurchasesweredownby1.3KBitcoin.
BytheendofOctober,though,thatvolumehadskyrocketedto5.8K.OnOctober13alone,ETFspurchased7.7KBitcoin—thehighestsingle-daybuysofar.
AsdemandfromETFsgrows,it’sworthnotingtheshiftingdynamicswithOver-The-Counter(OTC)desks.CryptoQuant’sdatashowsthatOTCdeskshavekeptBitcoinsuppliesatrecordlevels,withatotalinventoryofaround416KBitcoin,comparedto183K–193Katthestartoftheyear.
ThissurplusmeansETFscangettheirfillwithouttouchingpublicexchangesandspikingtheprice.Instead,theybuystraightfromOTCdesks,whichshieldsthebroadermarketfromsharppriceswings.
ThedailyETFpurchasesnowrepresentjust1%to2%ofthetotalinventoryheldbyOTCdesks.Comparethattothefirstquarterof2024,wheredailyETFbuystookupamuchlargerchunk—upto12%ofOTC’sinventory.ETFswouldneedtorampupdemandevenmoreifthey’regoingtomakeaseriousdentinOTCsupplies.
Andthere’sashifthappeninginthoseinventorynumbers.OTCdesks’overallBitcoinbalanceisn’tclimbinglikeitdidearlierthisyear.DuringQ2andQ3,theirstockpilesballoonedbyover77Kand92KBitcoininAugustandJune,respectively.Inthelastmonth,however,thatbalancerosebyonly3K.
LowerdailyBitcoininflowstothesedesks(downto90Kfromtheyear-to-dateaverageof189K)arehelpingtoslowtheinventorygrowth.ThisdropinsupplymightaddupwardpressuretoBitcoin’spriceifETFdemandholdsstrong.
MarketnervesaheadoftheU.S.election
WiththeU.S.presidentialelectionapproaching,Bitcoinisfacingmarketjitters.Tradingactivityhasreachednewheights,withopeninteresthittingrecordsthisweek.Afterpushingtowardanall-timehighof$73,800,Bitcoinstumbled,signalingthatmarketplayersarefeelingthestrain.Analystsarenowpredictingapossiblepriceretracementbeforeanyseriousgainsresume.
CryptoanalystTitanofCryptospottedalocalbottomat$66,200andquestionedifabouncemightfollow.HischartshowedIchimokuclouddataforaone-daytimeframe,highlightingapricedipbelowtheTenkan-sentrendline,suggestingBitcoincouldstillslidefurther.
Hesaid,“BTCcouldn’tcloseaboveTenkan,signalingapossiblemoreprofoundpullback.Ifthebreakoutisconfirmed,wemightseearetestofKijunaround$66,200,whichcouldmarkalocalbottom.”
BitcoinclosedOctoberwitha10%gain,finishingthemonthabove$70,000forthefirsttimesinceMarch.Butwiththeelectiondaysaway,themarketisn’texactlystable.
Observersnotethatelectionuncertaintycouldtriggervolatilityintheshortterm,whileBitcoin’soverallsupply-demanddynamicsremainbullish.Investorshaveexpressedmixedopinionsonhoweachcandidatemightimpacttheindustry.
NicPuckrin,CEOatCoinBureau,said,“What’sdrivingpriceactionisundoubtedlytheelection.”Headded,“ThemarketswilltaketheircuebasedonwhowinstheWhiteHouse.Trumpiswidelyseenaspro-crypto,althoughirrespectiveofwhowins,Bitcoinisstillprimedforapump.”
Election-relatedtensionisamplifyingBitcoin’stypicalOctober-Novemberrally.Historically,thesemonthshavebeenstrongforthecryptocurrency,withBitcoinclosinghigherinsevenofthelastelevenNovembers.Whileinvestorsprepareforpost-electionswings,somearebettingthataTrumpwincouldadd10%–15%toBitcoin’sprice,whileaHarrisvictorymightcauseasimilar-sizeddip.
ThiselectionseasonalsooverlapswithkeymilestonesforBitcoin.Octobermarkedsixmonthssincethelasthalvingevent,whichhalvedtherateofnewBitcoinissuance.Withsupplytighteninganddemandincreasing,someanalystsbelieveBitcoinisonthepathtoanotherrecord,thoughelectionvolatilitymightbeastumblingblockinthenearterm.
cryptopolitan.com