Bitcoin Touches All-Time High!

Bitcoin recently came within $100 of its all-time high and is currently priced at $72,500, marking an 8.1% gain over the past week. This price surge aligns with significant inflows into Bitcoin ETFs, with a remarkable $1.751 billion recorded between October 25 and October 29 alone.

Bitcoin ETF holdings are on track to reach the 1 million BTC mark in the coming days, which would mean ETFs collectively hold over 5.0% of Bitcoin’s circulating supply and 4.76% of its total maximum supply. This milestone reflects growing institutional interest and demand for regulated Bitcoin investment products, further reinforcing Bitcoin’s strength in the market.

Bitcoin Dominance

Bitcoin dominance (BTC.D) has continued to increase and is now approaching 60%, a level not seen since April 2021, currently standing at 56.2%. This increase has been fuelled by the underperformance of altcoins and Ethereum (ETH) since Q4 2022, alongside market disinterest in low-float altcoins and heightened uncertainty surrounding the upcoming U.S. presidential election.

Bitcoin Reserves on Exchanges

With ETFs actively accumulating Bitcoin and large volumes moving into cold storage, the reserve of BTC held by exchanges is declining significantly. This reduction in supply is significant, with exchange held Bitcoin dropping from 3.069 million to 2.632 million BTC, now representing only 12.5% of the total supply. Should demand continue to rise, especially in the event of a strong bull run or a break past all-time highs, this could lead to a substantial supply shock, further accelerating Bitcoin's price momentum as available supply tightens on exchanges.

Weekly Price Update

Israel Airstrike

Bitcoin’s recent price drop in response to news of an Israeli attack on Iran illustrates a typical market overreaction to geopolitical tensions, which has historically marked local bottoms driven by fear. Our analysis anticipated this, identifying the drop as a potential buying opportunity amongst the fear, which proved accurate as Bitcoin subsequently rebounded.

Should there be any retaliation from Iran, another brief dip may occur, but we expect a similar recovery pattern. With bullish catalysts on the horizon, including the upcoming U.S. election and potential interest rate cuts, Bitcoin is positioned to continue its upward momentum, potentially breaking recent highs.

Solana Challenges Ethereum

This week, Solana reached an all-time high against Ethereum, underscoring its rising popularity as a leading Layer-1 solution. With nearly instant transaction speeds and minimal fees, Solana offers a compelling alternative to Ethereum, where transaction costs have occasionally exceeded $100. These factors make Solana especially appealing to users seeking both efficiency and affordability. Recent 24-hour active address data reinforces this: Solana recorded 7.12 million active addresses compared to Ethereum’s 389,000, indicating a major uptake in user engagement on the network.

Despite Ethereum’s recent ETF launches, the performance has fallen short of expectations, with limited institutional uptake compared to Bitcoin ETFs, which continue to attract substantial liquidity. This muted response reflects a shifting institutional focus, with some larger funds reallocating from Ethereum into other assets like Solana. Solana's ecosystem, meanwhile, has demonstrated significant traction, with both established projects like Kamino and Jupiter rising by 32% and 12% over the past month, and emerging players such as meme coins Popcat and Fwog reaching all-time highs with weekly gains of 21% and 12%.

Year-to-date, Solana’s price has surged by an impressive 435%, vastly outpacing Ethereum’s 41% growth. While Ethereum’s market cap remains about 3.7 times larger, Solana’s comparative performance leaves room for expansion if current trends continue. Solana's ecosystem strength, particularly in sectors like memecoins, has created a flywheel effect that drives developer and user engagement, reinforcing network effects and elevating its appeal as a core portfolio asset.

While we see potential for Solana to maintain its upward trajectory and anticipate continued ecosystem growth, Ethereum remains a critical component of the crypto landscape. Despite its recent challenges, Ethereum’s strong foundational role in decentralised finance and smart contract adoption gives us reason to maintain a bullish outlook on its future as well.

Microsoft Bitcoin Investment

Microsoft, valued at over $3 trillion, is considering a potential investment in Bitcoin. The company will vote on an "assessment of investing in Bitcoin" at its annual shareholder meeting in December. Although Microsoft accepts Bitcoin for some payments, its Board of Directors opposes the upcoming proposal, calling it "unnecessary" as management has "already carefully considered". "Previous evaluations have included Bitcoin and other cryptocurrencies among the options considered, and Microsoft continues to monitor trends and developments related to cryptocurrencies to inform future decision-making," the company said in its opposition to the proposal.

On Friday, Michael Saylor, CEO of MicroStrategy, which stock has risen by 300% YTD and the largest corporate holder of Bitcoin, encouraged Microsoft CEO Satya Nadella to reach out to him for advice on the potential investment, saying, "If you want to make the next trillion dollars for Microsoft shareholders, call me.”

Shareholders, including Vanguard, BlackRock, and State Street, will be eligible to vote on the proposal in December. An investment in Bitcoin would shift Microsoft’s stance which currently reflects a risk-averse strategy to a more diversified approach.

What Will Happen After The Election?

This week is expected to bring significant volatility. Markets generally perform poorly in times of uncertainty, as seen in Bitcoin's recent downtrend and heightened fluctuations. As we approach the upcoming election, market behaviour reflects the anticipation of increased clarity.

With Bitcoin nearing its all-time highs , we anticipate the possibility of quick profit-taking regardless of the election outcome. However, we expect a Harris win to lead to a more sustained sell-off, with Bitcoin likely recovering and reaching new highs later in the year. Conversely, a Trump victory is likely to result in a surge either immediately or following a brief dip, aligning with the historical trend of bullish fourth quarters for Bitcoin.

Stacks Activates Nakamoto Upgrade

Stacks stands out as a pioneering project in Bitcoin DeFi, leveraging Layer 2 solutions to enable developers to create applications that capitalise on Bitcoin’s security while offering the flexibility needed for decentralised financial activities. The include lending/borrowing protocols, liquid staking, and decentralised exchanges. Recently, Stacks activated its much-anticipated Nakamoto upgrade, aimed at enhancing security, scalability, and network performance. This upgrade expands Bitcoin's smart contract capabilities, making Stacks essential in driving decentralised application (dApp) development within the Bitcoin ecosystem. Now, with transaction speeds comparable to Solana’s and providing 100% Bitcoin finality, Stacks fulfils a long-sought demand from developers to build on Bitcoin with enhanced functionality.

Currently, Bitcoin has around 1,000 developers compared to Ethereum’s nearly 8,000, a gap highlighting the immense potential for growth if more developers actively built on Bitcoin. Historically seen as a store of value, Bitcoin is now evolving through layers like Stacks. Today, over $13.3 billion in Bitcoin is utilised in decentralised finance (DeFi), while the remaining $1.3 trillion remains idle. This means more than 98% of Bitcoin’s capital is untapped—a $1 trillion opportunity for developers to unlock by creating new applications that put dormant Bitcoin to productive use.

The Nakamoto upgrade has been a major focus of the Stacks roadmap, with implementation beginning earlier this year. Following several delays, the upgrade is now fully activated, marking a significant milestone for Stacks and Bitcoin. Looking ahead, Stacks is preparing to release sBTC, a key innovation that could further integrate Bitcoin into DeFi, creating new opportunities for both developers and users in the ecosystem.

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