The recent behavior of institutional investors and Bitcoin exchange-traded fund (ETF) holders indicates a relatively stable market with minimal selling pressure expected in the near term.
Despite the recent drop in Bitcoin’s price below $60,000, current data suggests that these major players are not positioned for significant sell-offs, which could have indicated a local bottom for Bitcoin’s price.
According to CryptoQuant, short-term Bitcoin whales—defined as investors holding at least 1,000 BTC for no more than 155 days—show an unrealized profit of only 1.6%.
This minimal gain contrasts sharply with long-term holders of the same Bitcoin volume, who have been holding for over 155 days and enjoy an unrealized profit of 223%.
Ki Young Ju, the CEO of CryptoQuant, highlighted this disparity in an April 19 X post, emphasizing the significant profit margins experienced by different investor cohorts.
Further insights from CryptoQuant reveal that while small miners have an unrealized profit of 131%, larger mining firms have accrued 81%.
Notably, the top five mining firms have refrained from selling their holdings in anticipation of the upcoming Bitcoin halving, contributing to a reduction in sales to a two-year low as of the first quarter of 2024.
Bitcoin’s price fluctuations have also caught the attention of market analysts. After falling below $60,000 twice in April, Bitcoin recovered, approaching $65,000.
This pattern has led some analysts to suggest that a “double bottom” may have formed, potentially signaling a rebound in price.
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Additionally, technical indicators like the relative strength index (RSI), which had previously shown Bitcoin as overbought in March, adjusted back to a neutral level of 46 in recent measurements.
This reset in technical indicators supports the notion that Bitcoin might have reached a local bottom earlier in the week, as posited by Arthur Cheong, founder of DeFiance Capital, in another April 19 X post.
On the technical front, Bitcoin recently broke out from a significant trading channel on the 4-hour chart, prompting predictions of a possible rise to $72,000, as noted by crypto trader Satoshi Flipper.
However, the market dynamics are also influenced by the ETF sector, where institutional net inflows into U.S. spot Bitcoin ETFs turned negative around the time of the halving, with more than $147 million in net outflows recorded on April 18.
This trend contributed to Bitcoin’s price dip, though Denis Petrovcic, CEO of Blocksquare, remains optimistic.
He told Cointelegraph, “While some might anticipate a drop post-halving, the sustained institutional interest and decreased block rewards should keep BTC prices stable or slightly bullish, avoiding the typical ‘sell the news’ fallout.”
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Bitcoin experienced a sharp drop in value on April 19, plunging to seven-week lows amidst escalating geopolitical tensions in the Middle East.
This decline saw prices fall to $59,630, as reported by Cointelegraph Markets Pro and TradingView.
The decrease coincided with renewed conflicts between Iran and Israel, a situation that has notably affected Bitcoin prices throughout the month, resulting in a significant drop from highs around $70,000.
On April 18, Bitcoin had shown signs of recovery; however, this was short-lived as the market quickly responded to the unfolding events.
Despite initial concerns, the cryptocurrency managed a robust comeback, climbing to local peaks of $65,190, amid speculation that the tensions might not worsen.
Market analysts closely followed the price movements. On X (formerly Twitter), the trader known as Skew remarked on the extreme market volatility impacting both long and short positions.
He observed increased activity from buyers, noting, “Shorts blown out here & now seeing more interest from longs aka longs opening.”
He also highlighted that the recovery was predominantly driven by spot demand, with substantial bids placed during the dip below $60,000.
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Further insights from CoinGlass showed that short sellers were caught off guard as sell-side liquidity vanished in the $64,000 to $65,000 range almost instantaneously.
Another commentator, Credible Crypto, emphasized the strategic placement of $100 million in Bitcoin bids just below the current price to support upward movement, cautioning, “Good luck getting back in if you sold the bottom because of some news headline.”
Over the past day, the cryptocurrency market saw $138 million in short liquidations across various platforms.
This volatile environment overshadowed the approaching Bitcoin block subsidy halving, an event that traditionally garners significant attention.
According to trading firm QCP Capital, the market had established a strong baseline support at the recent lows, with anticipation slowly building for a potential rally as the halving neared.
With less than 15 hours to the halving, traders like Jelle and Crypto Ed provided their perspectives.
Jelle referred to efforts to bolster the weekly close with “Operation ‘save the weekly’,” while Crypto Ed suggested that the bottom might have been reached, projecting an upward trend if no further disruptive news emerged from the Middle East.
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Swedish crypto miners have incurred a significant tax debt exceeding $90 million, following a comprehensive audit by the Skatteverket, Sweden’s Tax Agency.
The agency scrutinized 21 crypto-mining firms from 2020 to 2023, uncovering tax discrepancies in 18 of these firms.
The investigations brought to light various misrepresentations and omissions that enabled these firms to exploit tax incentives improperly.
The Skatteverket‘s findings indicated that several crypto firms manipulated their business descriptions to evade value-added tax (VAT) on eligible operations.
Additionally, some managed to dodge import taxes on their mining hardware and income tax on the revenues generated from mining activities.
The issues highlighted involve not only unpaid taxes but also improperly claimed rebates and underreported crypto assets.
The Tax Agency elucidated the situation, stating, “The described approach leads to tax disappearing from the country in the form of incorrect payments of input VAT, unpaid output VAT and unreported crypto assets.”
As a result, the implicated crypto mining firms have been collectively ordered to repay up to 990 million Swedish krona (about $90 million).
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This sum includes 932 million krona ($85.4 million) in VAT discrepancies and an additional 57.9 million krona ($5.3 million) in tax penalties.
Despite the hefty tax demand, several of these firms appealed the decision.
The administrative court reviewed these appeals, ultimately upholding the claims of two firms while dismissing the remainder.
Adjustments to the originally stated amounts were made based on these verdicts.
In a related development in November 2023, Hive Digital Technologies, a player in the crypto-mining industry, expanded its operations in Sweden.
The firm purchased a commercial property along with a data center in Boden. Johanna Thornblad, the country president for Sweden at Hive, remarked on this strategic move: “The new data center will enable HIVE to grow its regional footprint while further demonstrating its commitment to its ESG focus, sustainable practices, environmental responsibility, and energy efficiency with its newest ‘green’ energy powered data center.”
This facility is set to accommodate the latest generation of ASIC servers, thereby boosting the company’s Bitcoin production capabilities.
Hive Digital Technologies is known for its dedication to green energy solutions, operating data centers in Canada, Sweden, and Iceland to facilitate eco-friendly crypto mining.
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Bitcoin‘s long-term prospects remain robust despite a potential downturn in its immediate future, according to the latest analysis from prominent trader Mikybull Crypto.
Sharing his thoughts on X (formerly Twitter) on April 17, he confirmed that Bitcoin’s current trajectory aligns with the typical patterns observed in past bull cycles.
Currently, Bitcoin is attempting to recover from a significant 15% drop from its peak values.
This setback has introduced the possibility of the cryptocurrency falling below the $60,000 mark, contradicting earlier optimistic forecasts and leading to a range of lower price targets.
Mikybull Crypto maintains that this downward trend is typical of Bitcoin’s market behavior, especially around its halving events, which historically have not been immediately beneficial for its price.
“Bitcoin is experiencing normal correction as it always did every halving month in preparation for cycle top,” he noted, adding that the current market pattern resembles the re-accumulation phase seen in December 2023, which eventually led to a surge up to $73,000 in 2024.
The analysis highlighted a Wyckoff schematic indicating a potential upward breakout.
This approach aligns with the upcoming block subsidy halving on April 19, which could set the stage for a subsequent rally.
Mikybull Crypto pointed out significant bid liquidity around $57,000 as a key area for potential accumulation and clearing of about $2.2 billion in long liquidation pools, according to data from CoinGlass.
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Further market insights were shared by Skew, another noted trader, who observed the sensitivity of perpetual swaps to spot price movements, suggesting potential volatility around these liquidity zones.
This sentiment was echoed in recent price movements that saw Bitcoin dip below $61,000, marking its lowest point since March 20, as reported by Cointelegraph Markets Pro and TradingView.
In a broader context, Bloomberg Intelligence’s senior commodity strategist, Mike McGlone, highlighted the comparative risks between Bitcoin and traditional assets like gold, suggesting potential broader market implications if Bitcoin begins to underperform significantly compared to gold.
Despite these short-term challenges, Mikybull Crypto emphasized the strong fundamental outlook for Bitcoin, stating, “Bitcoin from a macro perspective is looking solid and on track which shows that the cycle top in this cycle is far from being reached.”
This reassurance reflects a confidence in Bitcoin’s resilience and its ability to navigate through customary market cycles to realize long-term gains.
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BlackRock‘s iShares Bitcoin Trust (IBIT) has emerged as the only spot Bitcoin exchange-traded fund (ETF) in the United States to record inflows over the last two days, setting it apart from its counterparts.
While IBIT saw an addition of $73.4 million on April 15, a slight decrease from the previous day’s $111.1 million, the other eight ETFs in the market did not register any new inflows, according to data from Farside Investors.
Notably, the only exception to this trend was Grayscale, whose Bitcoin Trust faced significant outflows.
In stark contrast to IBIT’s inflows, the Grayscale Bitcoin Trust (GBTC) experienced substantial outflows, losing $110.1 million on April 15, which, though substantial, was less than the $166.2 million withdrawn on April 14.
Across the board, the ten spot Bitcoin ETFs witnessed collective net outflows on April 14 and 15, amounting to $55.1 million and $36.7 million respectively.
The general trend for U.S. Bitcoin ETFs has been negative, following a tumultuous week for Bitcoin itself. The cryptocurrency’s price fell by 11.6% over the week, dropping to $63,410, as reported by Cointelegraph Markets Pro.
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This downturn coincided with broader global Bitcoin investment products also experiencing outflows, with a net $110 million leaving these funds in the week ending April 12.
James Butterfill, head of research at CoinShares, pointed out that these outflows from Bitcoin investment products underscore a growing hesitancy among investors.
He noted that not only did crypto investment products see a total of $126 million in net outflows last week, but trading volumes also rose from $17 billion to $21 billion, indicating increased market activity amidst the uncertainty.
Further exacerbating the volatility in the Bitcoin market was the geopolitical tension following Iran’s attack on Israel on April 13, which resulted in Bitcoin plummeting to a three-week low of $61,918.
Additionally, the anticipated halving event scheduled for April 20, which will reduce Bitcoin’s issuance rate by half, is also contributing to the uncertainty in the market.
This event is closely watched by traders due to its potential impact on Bitcoin’s price dynamics.
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Despite the high volatility of cryptocurrency prices, major industry players such as Bitcoin Depot, a leading Bitcoin ATM operator, report little impact on their business performance.
In its latest 10-K annual report filed on April 15, Bitcoin Depot disclosed that its revenues show no historical correlation with Bitcoin’s fluctuating prices.
The company reported revenues of $689 million in 2023 and $647 million in 2022, which did not fluctuate in tandem with Bitcoin’s price movements.
Throughout 2023, while Bitcoin’s value surged by 155%, Bitcoin Depot’s revenue grew by only 6%. This indicates a disconnect between the company’s financial performance and the cryptocurrency market trends.
The firm attributes this stability to the nature of its services.
According to Bitcoin Depot, “Based on our own user surveys, a majority of our users use our products and services for non-speculative purposes, including money transfers, international remittances, and online purchases, among others.”
Bitcoin Depot has taken measures to minimize its exposure to Bitcoin’s price volatility.
The company maintains a “relatively low balance” of Bitcoin, under $0.8 million at any given time, and replenishes its Bitcoin supply exclusively through purchases from top liquidity providers such as Cumberland DRW and Abra.
This strategy avoids the risks associated with Bitcoin mining.
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The operational finances of Bitcoin Depot involve two key components: Bitcoin stored in hot wallets to fulfill user transactions and cash accumulated in its Bitcoin ATM (BTM) kiosks.
As of the end of 2023, cash in these kiosks represented about 21% of the company’s average monthly revenues.
Established in 2016, Bitcoin Depot has grown to become the world’s largest cryptocurrency ATM operator as confirmed by CoinATMRadar.
With more than 7,000 BTMs globally as of April 2024, Bitcoin Depot leads its closest competitors, CoinFlip and BitStop, which manage 4,800 and 2,500 machines respectively.
Notably, 2023 marked the first-ever decline in the global installation of Bitcoin ATMs, reflecting a shift in the industry dynamics.
However, Bitcoin Depot’s CEO, Brandon Mintz, remains optimistic about the future, especially with the upcoming Bitcoin halving event expected this week, which he believes will catalyze a significant rebound in ATM industry growth.
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Gold advocate Peter Schiff has expressed skepticism towards claims by market analysts predicting that Bitcoin could reach a price of $100,000 during its current bull run.
Schiff, a vocal critic of Bitcoin, challenged the notion that the cryptocurrency could achieve such a milestone, particularly attributing the expected surge to the demand generated by spot Bitcoin exchange-traded funds (ETFs).
In his critique, Schiff pointed to the lackluster performance of several Bitcoin-related stocks, such as Coinbase, MicroStrategy, and Galaxy Digital, highlighting their recent declines despite the overall enthusiasm around Bitcoin.
On a post dated April 16 on the social media platform X, he noted, “Coinbase is down 21%, Galaxy Digital is down 26%, MicroStrategy is down 33%, and several Bitcoin mining stocks are down double digits.”
These observations came at a time when, broadly speaking, Bitcoin and crypto-related stocks have generally outperformed traditional market equities since the beginning of 2024.
However, Schiff did not provide specific timelines for these losses, despite their occurrence within a broader context of recent downturns in the past week attributed to a bearish momentum in the cryptocurrency market.
Market analysts have previously mentioned that Bitcoin often experiences a dip before its halving event, which is expected later this week, and typically recovers and gains momentum afterward. This pattern provides a counterpoint to Schiff’s bearish stance.
Responding to Schiff’s skepticism, Bitcoin advocates quickly took to social media to refute his claims by pointing out selective data usage.
One user highlighted that MicroStrategy’s stock has actually seen an impressive increase of 300% year-on-year.
Others compared the performance of Bitcoin with that of gold, which, despite reaching new all-time highs in the second quarter of 2024, still lags behind Bitcoin’s performance in the same period.
Bitcoin enthusiasts like Dan Held and Willy Woo also engaged with Schiff’s comments, reminding him of his missed opportunity to invest in Bitcoin back in 2013 when it was priced around $1,000.
This interaction underscores the ongoing debate between proponents of traditional assets like gold and supporters of newer digital currencies such as Bitcoin.
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The Bitcoin halving, a core feature of the cryptocurrency’s protocol, will soon reduce the block reward from 6.25 BTC to 3.125 BTC, cutting the supply of new bitcoins by half approximately every four years, or every 210,000 blocks.
This event, anticipated to occur in the coming days, aims to make Bitcoin scarcer, acting as a deflationary force and enhancing its value as a store of wealth.
Investors are optimistic about potential price increases post-halving, whereas miners face the challenge of adapting to the reduced rewards.
As the reward for mining a Bitcoin block halves, miners must increasingly focus on operational efficiency to remain viable.
“The halving always shakes things up. It is a great opportunity for new players to come into the industry,” noted Alejandro De La Torre, founder and CEO of mining pool Demand.
Mining operations must now prioritize accessing inexpensive energy and upgrading their equipment.
This necessity could drive significant shifts within the Bitcoin mining industry, affecting all stakeholders.
Ben Gagnon, chief mining officer at Bitfarms, explained the direct impact on older equipment, noting that miner models three to five years old might become economically unfeasible if Bitcoin prices don’t sufficiently compensate for the reduced block reward.
The global Bitcoin hash rate, a measure of the network’s computational power, continues to grow, signaling preparation among miners for the upcoming halving.
“Most of the successful miners are already using new and efficient machinery.
Those who are not prepared are doomed to go broke,” remarked Anibal Garrido, a Bitcoin mining expert.
The geographical landscape of mining may also shift.
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While the U.S. holds a significant portion of the mining power, the halving could redistribute this balance, with miners potentially relocating to countries with lower electricity costs, like Paraguay and Venezuela, which have attracted attention due to their favorable conditions for mining.
De La Torre also highlighted opportunities for regions with low purchasing power, suggesting that “the halving is an opportunity for new regions to emerge as profitable places; keep an eye out for the Middle East, Africa, and Latin America.”
“Despite the challenges, shifting to other cryptocurrencies remains unlikely for Bitcoin miners.
“Digital gold will always be digital gold. No one with common sense will migrate from gold to garbage,” Garrido asserted, dismissing the idea of mining less dominant SHA-256 based cryptocurrencies.
Concerns about the potential centralization of the mining industry have been debated.
Although the halving could lead to the exit of smaller miners, thereby increasing the market share of larger entities, natural economic forces are believed to counteract significant centralization.
“Centralization seems to be an increasingly smaller and smaller concern with each halving,” Gagnon clarified.
Ultimately, the halving represents both a challenge and a critical evolutionary step for Bitcoin, ensuring only the most efficient and prepared miners continue to thrive.
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The impending Bitcoin halving is anticipated to foster a more sustainable Bitcoin mining network by encouraging the adoption of greener energy solutions.
This shift is motivated by the upcoming reduction in Bitcoin block rewards from 6.25 BTC to 3.125 BTC, amid a rising Bitcoin hash rate.
As profitability for mining firms may decrease, a push towards more efficient, sustainable energy sources is likely.
Matteo Greco, a research analyst at Fineqia International, emphasized the economic forces at play, stating, “This dynamic compels mining companies to optimize capital efficiency and seek cheaper electricity sources, leading to an increasing use of renewable energy in BTC mining.”
Historically, Bitcoin has faced criticism for its substantial energy demands and reliance on fossil fuels. However, a positive trend is emerging; more than half of the network’s energy usage now comes from renewable sources.
Daniel Batten, managing partner of CH4 Capital, noted in the Bitcoin ESG Forecast that since the end of January 2024, renewable energy has constituted over 54.5% of the network’s power.
The design of Bitcoin mining itself promotes greater efficiency, which not only boosts network security but also reduces environmental impact.
Greco further explained, “The BTC mining rewards mechanism inherently drives greater efficiency with each step, enhancing network security, reducing carbon emissions, and promoting research into sustainable block confirmation methods.”
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Despite regulations against it, China still plays a significant role in the global Bitcoin mining landscape, contributing about 15% to the global hash rate.
The country has moved away from coal-based, off-grid mining, which is incompatible with its emission goals, and is now predominantly utilizing hydroelectric power, especially during the wet seasons in regions like Xi’an, Wuhan, Beijing, and Xining.
Batten highlighted the financial strategies of retail miners in China, who continue mining at a loss as a means to circumvent the local financial system.
He explained, “They convert Chinese yuan for ASICS and electricity which creates BTC, which gets converted into USD. Many retail miners are happy to take the profitability hit simply to have a way to convert Yuan to USD.”
As the Bitcoin network approaches this halving, the anticipation is that these shifts may not only lead to a leaner, greener mining operation but could also have significant economic and environmental implications globally.
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On April 15, the Securities and Futures Commission (SFC) of Hong Kong granted conditional approvals to three Chinese offshore asset managers—Harvest Fund Management, Bosera Asset Management, and China Asset Management—for issuing spot Bitcoin and Ether ETFs.
Despite this development, Eric Balchunas, a senior ETF analyst at Bloomberg, expressed skepticism about the significant impact of these ETFs.
Balchunas challenged optimistic inflow estimates of $25 billion for these ETFs on social media, calling such expectations “insane” and predicting a more modest outcome. “Don’t expect a lot of flows — I saw one estimate of $25b that’s insane.
We think they’ll be lucky to get $500m,” he remarked. He highlighted the relatively small size of the Hong Kong ETF market compared to that of the United States and pointed out that the approved ETFs do not permit Chinese retail investors to officially access these products, further limiting their potential.
The analyst also compared the new ETF issuers to larger asset management firms like BlackRock, which manages over $9 trillion.
He noted, “U.S. spot bitcoin ETFs have more assets than the entire HK ETF market,” underscoring the disparity in market size and influence.
Additionally, Balchunas commented on the inefficiencies and high costs likely to affect the new ETFs, with expected fees ranging between 1-2%.
He cited these as factors that would contribute to wider spreads and potential discounts on the ETFs, unlike the lower-cost models seen in the U.S. market.
“The underlying ecosystem there is less [liquidity] efficient = these ETFs will likely see wide spreads and prem discounts,” he explained.
Despite Balchunas’ reservations, Jamie Coutts, chief crypto analyst at Real Vision and former Bloomberg Intelligence analyst, provided a contrasting perspective.
Coutts suggested that the introduction of these ETFs could tap into a “massive pool of capital” for Chinese investors, known for their adeptness at navigating government-imposed capital controls.
The structure of these ETFs also stands out, as they are set to utilize an in-kind creation model.
This allows new ETF shares to be directly issued using Bitcoin and Ether, contrasting with the cash-create redemption model prevalent in U.S. spot Bitcoin ETFs, which has raised concerns over potential money laundering and fraud.
The launch of these spot Bitcoin and Ether ETFs is expected in about two weeks, marking a significant, albeit cautiously viewed, expansion in the financial product offerings available in Hong Kong’s crypto market.
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