The Weekly Recap: Week 44 & 45

KEY TAKEAWAYS 

  • BTC broke through the $15k level last week and continued to rise in the weekend following the U.S. presidential election results
  • A Democratic win reinforces belief in BTC, which is gradually being accepted as the new hedge against global macroeconomic uncertainties
  • Rumors continue that Biden will look into revising key tech policies that could have a significant impact on the future of BTC 

Bitcoin 

The past two weeks have been sensational for Bitcoin, which opened at $13,020 in Week 44 and finished at $13,690. Election week (week 45) drove BTC’s price up, breaking key resistance levels and reaching $15,498 — a record high since January 8, 2018. 

Source: TradingView

For the past two weeks, Bitcoin managed to establish strong support at $13k, and eventually $14k, even as the stock market tumbled on October 30. It even managed to test the waters at $16k before eventually settling above the $15k mark. This is further proof — in addition to the mid-March liquidity crunch — that investors are growing increasingly more confident in Bitcoin’s performance and see it as a potential hedge against macroeconomic uncertainties. 

Though the price dipped below $15k on Saturday, possibly due to the U.S. presidential election saga, it eventually gathered steam to regain its territory above $15k. 

Source: Bybit

BTC had seen gains of 28% for the month of October, trailing behind its positive movements in January and April. BTC dominance also clinched a four-month high at 65%. Overall, the BTC market had witnessed an astounding spike of 13.2% and is on trend to reclaim a larger total market capitalization. 

BTCETHBCH LTCXRPLINK
Market Share65.13%11.62%1.13%0.91%2.60%1.13%
The Market Dominance of Major Coins 

On-Chain Activities 

Source: Glassnode

Mining difficulty saw the largest percentage drop since 2012, which means that the resources required for miners to mine new bitcoins has decreased significantly. This implies that miners’ profit margins are set to increase, which could be due to mining firms in China temporarily shutting down and relocating to other areas in order to leverage cheaper energy options following the monsoon season. 

Similarly, Bitcoin’s mining hashrate experienced significant decline during these two weeks. The seven-day moving average dipped more than 25% since the start of November, reaching 107 EH/s. 

Sourse: The Block

As miners continue to enjoy a particularly “lucrative” period before the next difficulty adjustment, the Miners’ Position Index (MPI) hit an annual high. This could indicate that temporary easing in mining difficulty and the aggressive price rise have led to improved profit margins for miners, incentivizing more outflow. 

Source: CryptoQuant

In fact, the amount of BTC transferred to exchanges surged to new highs on November 5, as the price of BTC skyrocketed amid the uncertainties surrounding the U.S. presidential election. It indicates that even mid to long-term holders were cashing out once BTC reached its highest price point since 2018. The cashing out frenzy eventually cooled on November 7, yet the amount of BTC held at exchanges still sits above the 30 day average. 

Source: Chainalysis
Source: Chainalysis

BTC net inflows from crypto to fiat exchanges is also experiencing an upward trend, which could suggest that investors are rapidly exchanging fiat for bitcoin to hedge against macroeconomic uncertainties. 

Source: Chainalysis

The Fear and Greed Index shot up to 90 last week, into “Extreme Greed”, as a result of a positive feedback loop driven by the FOMO mentality. 

Source: Alternative.me

U.S. Election Week 

Four years ago, Trump’s surprise victory over Hillary Clinton proved that polling wasn’t an exact science. In the closing hours of the 2016 U.S. election day, global stock markets tumbled before bouncing back following the announcement of a Republican win. The markets ended the week experiencing a 5% gain back in 2016. Bitcoin, on the other hand, experienced inverse market movements, as the initial bump quickly eroded after Trump was announced the winner. 

Therefore, it is no coincidence that the sharp increase in price this week is in some way related to the contested election. However, this time, cryptocurrencies and traditional financial indices seem to be in perfect unison. After the Associated Press (AP) called Pennsylvania for Biden, both the BTC and the stock markets reacted with a small dip before recovering. BTC fell back into the $14.5k range before rebounding to its previous range at around $15.5k. 

Altcoins & DeFi 

DeFi experienced a collapse in price, which may have exhausted its relentless bull drive since June this year. However, the DeFi perp index has picked up slightly since Nov. 4. Despite the inverted V-shape on charts, DeFi activities are still high with the total value locked in DeFi approaching its previous high at approximately $12.5 billion. 

Source: FTX
Source: Defi Pulse

What to Expect

The current market could unwind when macroeconomic uncertainties ease, which would require more than just a Biden victory. The president-elect’s proposed $2.3-trillion fiscal policy measures could be the catalyst for a continued bull run, though the actual rollout would depend on whether the next administration could expand his victory to a Democratic sweep. The current bull momentum is expected to last without much friction as market participants eagerly await the result of the senate election, now at 46:48 with GOP holding a marginal lead. The senate election results would ultimately determine whether Biden’s triumph could indeed usher in a new era, with crypto at the forefront.