Since Donald Trump’s election victory, Bitcoin has surged by over 30%, fuelling renewed optimism across the market. Yet, the Fear and Greed Index suggests the market isn’t in a state of extreme greed. Even with the rapid price increase, Bitcoin appears far from overvalued, indicating the potential for further upside. Meanwhile, BlackRock’s Bitcoin ETF has overtaken its Gold ETF in assets, highlighting the growing institutional appetite for digital assets. Additionally, Bitcoin’s network fundamentals continue to strengthen, with the network hashrate hitting an all-time high of 764 EH/s and mining difficulty crossing the 100T mark. Hashprice is at $56/PH/day, providing relief for miners as profitability improves. In this week’s mining economics rundown, we’ll cover the following topics:
Bitcoin up over 30% Since Trump Victory
No Extreme Greed Yet
Bitcoin Still Far From Overvalued
BlackRock ETF Flippening
Network Hashrate Marks Another New ATH at 764 EH/s
Difficulty Crossed 100T
Hashprice Back Above $50/PH/day Again
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Bitcoin up over 30% Since Trump Victory
Bitcoin surged to almost $90,000, reflecting more than a 30% increase since Donald Trump’s recent U.S. presidential election victory on Wednesday, November 6. This upward momentum continued over the weekend, with Bitcoin experiencing a rare “weekend pump,” climbing over 6%. While multiple factors may have influenced this rally, Trump’s win appears to be the primary driver. The Trump administration’s stance is seen as bullish for Bitcoin for several reasons:
Strategic Bitcoin Reserves: Trump is committed to building a strategic Bitcoin stockpile for the U.S. Government, with a supportive Congress that could make this feasible. The strategic plans carry substantial geopolitical weight, potentially igniting a global race to amass Bitcoin reserves.
Pro-Bitcoin Policy Shifts: Trump aims to remove anti-Bitcoin figures from influential positions, such as Elizabeth Warren and Gary Gensler, who have previously posed regulatory challenges. He has also pledged to protect the right to self-custody for Bitcoin holders and vowed to prevent the implementation of a central bank digital currency (CBDC) under his administration.
Pro-Bitcoin Leadership: Howard Lutnick, the Bitcoin-friendly CEO of Cantor Fitzgerald (a $13 billion AUM firm and a Bitcoin lending provider), is expected to staff key roles, likely further encouraging Bitcoin-friendly policies.
Pro-Energy Policies for Miners: Favourable energy policies are expected to reduce operating costs for Bitcoin miners, enabling them to hold onto more of the Bitcoin they mine, further supporting the market.
Corporate Tax Cuts and Liquidity: Planned corporate tax cuts could widen fiscal deficits, fostering a liquidity environment that supports asset growth, including Bitcoin.
Asset Price Growth as a KPI: With rising asset prices as a core performance metric, Trump is likely to back policies that support asset markets, similar to his approach in 2020.
In the short term, indicators like the Relative Strength Index (RSI) suggest that the price is overheating and may need to cool down. However, in the medium to long term, it appears challenging to halt this bull’s momentum.
No Extreme Greed Yet
The Fear and Greed Index is a sentiment tool that helps investors assess the emotional climate of the Bitcoin and crypto market. It measures whether the market is leaning towards extreme fear or excessive greed. When the index indicates extreme greed, it may imply that Bitcoin’s price is above its intrinsic value, signalling a possible time to sell.
Currently, the index is still under 80. This suggests that the market hasn’t reached a level of extreme greed yet, implying that there may still be room for further growth. Looking at the start of the parabolic phase of Bitcoin in 2021, you can see that there can be extreme greed for various weeks before seeing any corrections.
Bitcoin Still Far From Overvalued
The 2-Year MA Multiplier is a Bitcoin chart designed as a long-term investment tool, helping investors identify optimal times to buy or sell Bitcoin for maximum returns. The chart features the 2-year moving average (MA) line, along with a multiple of this line— 2yr MA x5. Historically, periods when Bitcoin’s price falls below the 2yr MA (green line) have presented attractive buying opportunities. Conversely, when Bitcoin’s price nears the 2yr MA x5 (red line), it has often signalled a profitable time to consider selling. Looking at this chart, it can be concluded that Bitcoin is still in neutral territory. The 2yr MA x5 is currently at $209,000.
BlackRock ETF Flippening
The Bitcoin ETFs had an incredible election week, with November 7 setting a record for single-day net inflows at around $1.5 billion across all spot ETFs. BlackRock’s ETF led the charge, contributing approximately $1.1 billion of these inflows. This week the iShares Bitcoin ETF (IBIT) saw $1 billion in trading volume within the first 35 minutes. Although slightly slower than the day after the election, when it hit that mark in just 20 minutes, it’s still intense activity. In just 10 months, the iShares Bitcoin ETF (IBIT) has surpassed the iShares Gold ETF (IAU) in total assets. For context, IAU launched back in January 2005.
Network Hashrate Marks Another New ATH at 764 EH/s
Bitcoin’s network hashrate hit a new all-time high of 764 EH/s on November 1st before slightly retracing by just over 20 EH/s. Despite Bitcoin’s price increase, the hashrate has remained relatively stable over the last week. A network hashrate exceeding 800 EH/s by year-end appears very likely.
Difficulty Crossed 100T
On November 4th, Bitcoin network difficulty adjusted +6.24%, breaking through the 100 trillion level for the first time. Only 18 months ago difficulty was at 50 trillion. This is significant because it reflects a record level of competition among miners, driven by increased hashrate. This rising difficulty underscores the network’s security, as higher difficulty makes it more challenging and costly for potential attackers, while also indicating continued investment in mining infrastructure, even in a halving year. The next Bitcoin difficulty adjustment is projected for November 18th and is expected to be a slight decrease.
Hashprice Back Above $50/PH/day Again
The bullish price rally pushed hashprice above $50/PH/day again. Currently hashprice is at $55/PH/day, a level last seen five months ago. If transaction fees remain flat, BTC would need to reach approximately $95,000 for hashprice to climb back to $60/PH/day at the current difficulty level.
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