Dispatch #163: The Mechanics of a Bitcoin Pump

Oct 28, 2023 3 min read

Dispatch

In this patch of your weekly Dispatch:

EU wants blockchain 🇪🇺
Crypto sets it straight ✋
Regulation pioneers 📖

The Big Idea

They Who Move the Price

Last week Dispatch called for a potential Bitcoin rejuvenation of sorts. Fittingly for our publication’s editorial desk, Bitcoin crossed $30,000 for the first time in months on Saturday evening, before continuing its attack towards a 2023 peak of $35k, where it settled. Stellar performance from both BTC – and the Dispatch intern 😉 – to bounce off the current bottom.

And with the former closing the week with its 20% gains intact, there were a few fundamental unfoldings worth exploring as the Fear and Greed index flipped virtually overnight (from 44 in September to 70 currently) creating levels of open interest on market places rarely seen in months.

Еxcitement surrounding the potential approval of spot Bitcoin ETFs, catalyzed by BlackRock's involvement, has played a significant role. In anticipation of ETF approvals and the expected surge in demand, asset management firms accumulate Bitcoin, leading to substantial Bitcoin outflows from exchanges. A closer inspection reveals that around 20,000 BTC have left exchanges in the few days leading up to the latest rally, with a significant portion of transactions being over $10M. Moreover, Bitcoin-related investment products have seen net inflows over the last four consecutive weeks of around $180M.

This livened up trading activity, as Bitcoin's futures open interest on the Chicago Mercantile Exchange (CME) reached $3.4B. In addition, $180M in short positions were liquidated as the price rally took center stage – possibly a bear-capitulating event that allowed BTC to settle above $30K.

So, with the combination of high expectations and substantial corporate capital, the situation oddly resembles the environment in the big-tech stock market.

Could the role of a spot Bitcoin ETF be to become the most technologically advanced tradable asset globally?

The Latest In…

21st Century Blockchain Renaissance

Europe is gearing up to leverage blockchain technology to simplify administrative processes across its 27 member nations and has allocated €11.2B towards this formidable mission. Starting in 2024, the European Commission is set to actively promote sustainable tech solutions like distributed ledger technologies, fostering innovation and responsible usage. The ultimate goal is to enhance administrative efficiency, attract businesses, and bolster crisis management via solutions including the creation of a secure digital identity wallet for EU citizens and the formation of digital infrastructure consortia for cross-country collaboration.

The Latest In…

Setting the Records Straight

In the wake of recent events, there has been much speculation about cryptocurrency's role in funding terrorist groups like Hamas. Renowned crypto analytics company Elliptics has taken a stand to set the record straight. Contrary to widespread claims, a closer examination reveals there's no substantial evidence supporting the notion that Hamas has received significant cryptocurrency donations. Cryptocurrency transactions are transparent, traceable, and often tied to real identities, making it a less viable source for illicit funds, Elliptic states. Meanwhile, cryptocurrency fundraising for humanitarian causes in Israel has flourished.

The Latest In…

Crypto Make the World Go Round?

🇲🇽 Mexican Senator Indira Kempis is pushing for Bitcoin's inclusion in the country’s framework as legal tender. Despite initial opposition, her efforts aim to promote cryptocurrency adoption in Mexico. Kempis is also running for the Presidency in 2024.
🇯🇵 Japan is emerging as a pioneer in stablecoin regulation with its proactive stance to address the backing of stablecoins and ensure accessibility. Japan's regulations have strict provisions to safeguard assets, including keeping 100% of fiat currencies backing stablecoins within Japan.
🇧🇷 Brazil's central bank President Roberto Campos Neto highlighted the challenge of balancing privacy and open networks in the development of central bank digital currencies (CBDCs). More on CBDCs in Brazil on the Social Block. 🎧

The Week’s Most Interesting Data Story

The Great Bitcoin Move

Bitcoin supply across exchanges stands at just above 2.3M coins according to data from Glassnode to mark a bottom since April 2018. A notable decline in recent months also corresponds with the hype around spot Bitcoin ETFs. That’s all the validation some need.