Summary Following the election of President Trump, investors have piled nearly $2 billion into crypto products in just 1 week, with over 90% going to BTC. Public company holdings of BTC are up 34% year to date, with MicroStrategy making up the overwhelming majority of that increase. Popular cycle top indicators like MVRV Ratio, Puell Multiple, and the Stock-to-Flow Model show considerable room to run still if history is any guide. As of article submission, Bitcoin ( BTC-USD ) has printed a fresh all time high of $87,000 per coin. Having rallied nearly 30% in a matter of just a few days, a $100,000 per coin Bitcoin price seems as though it's only a 'matter of when' rather than a 'matter of if' at this point in time: BTC Weekly Chart, 11/11/24 (TrendSpider) The chart setup for BTC looks terrific for bulls. In recent pieces for Seeking Alpha, I've covered Bitcoin from a variety of different angles; including on-chain metrics, seasonality, technical conditions, and election impact: BITO: Buying The 'Breakout Shakeout' BITW: The 'Trump Trade' At A Discount From low to high, BTC has added $20k per coin in just 7 days . Given the absolute surge in the price of the coin since my last two Bitcoin-related articles, I wanted to add some additional coverage for readers to consider. In this piece, we'll explore recent capital flows, possible cycle top indicators to be mindful of, and a reiteration of why I personally like the Fidelity Wise Origin Bitcoin Fund ETF ( FBTC ) as my preferred ETF for long term allocations. Capital Flows and Corporate Holdings During the monstrous BTC rally earlier this year that took Bitcoin on a 90% ride between late-January and mid-March, the aggregated on-chain holdings of the US-based spot products increased from 635k BTC to roughly 830k BTC before holdings growth stalled out for several months. US Spot ETF Holdings (TheBlock) We again see on-chain holdings in these funds starting to quickly rise once again. As of November 10th, these funds hold 1.05 million BTC on behalf of investors; indicating a sharp 10% increase in supply held through spot ETFs since the end of September. Per data from CoinShares, the week ended November 8th was the 5th consecutive week of positive inflow for crypto-related investment products globally. From a raw figure standpoint, the crypto market has seen nearly $2 billion of net inflow since the election of President Trump on November 5th. There has been a staggering $1.8 billion of investment demand for BTC alone in a single week: Asset Flows (CoinShares) Year to date, net flows for Bitcoin through traditional investment products have now surpassed $29 billion. ETFs and other investment funds aren't the only buyers. We've seen public and private companies execute corporate treasury management strategies that include Bitcoin in recent years. Interestingly, the year to date holdings data is a bit more mixed: BTC Holdings 12/31/23 11/10/24 YTD Private Companies 479,361 410,401 -14.4% Public Companies 272,103 363,629 33.6% Public & Private Combined 751,464 774,030 3.0% Source: Bitcoin Treasuries While public companies have grown BTC holdings by 33.6% year to date, private companies have actually been net sellers of BTC since the end of 2023. In fact, when we strip out the BTC holdings of MicroStrategy ( MSTR ) from the rest of the public company holdings, we see a far less enthusiastic story for even the public companies: BTC Holdings 12/31/23 11/10/24 YTD Public Companies 272,103 363,629 33.6% MicroStrategy 189,150 279,420 47.7% Public minus MSTR 82,953 84,209 1.5% Source: Bitcoin Treasuries Taking out MicroStrategy's BTC holdings from total public holdings results in just a 1.5% year to date increase in BTC held via public companies. This is certainly a trend that I suspect long term Bitcoiners will want to keep an eye on going forward, as it likely conflicts with the notion that we're seeing more adoption of Bitcoin as a corporate treasury strategy. Cycle Indicators In my October article covering the iShares Bitcoin Trust ( IBIT ), I shared several cycle indicators that, I felt, were worth considering such as HODLer balance and realized HODLer price. In this update, I'd like to share a few additional metrics that, I think, can be helpful for assessing when a cycle peak may be in. First, the MVRV Ratio: MVRV Ratio (IntoTheBlock) This is the market value to realized value, or the average purchase cost of each coin. During past cycle peaks, we've seen the MVRV ratio approach or even eclipse the 400% level. The ratio hit 435% in December 2017 and 373% in 2021. As of November 10th, the MVRV checks in at 239%. Even if we assume a law of diminishing returns and project just a 300% MVRV ratio top for this cycle, the ratio would be projecting a $135k per coin BTC price at current realized price levels. How does this compare with other models? Puell Multiple (Bitcoin Magazine PRO) The chart above is showing Bitcoin's Puell Multiple in orange. This figure takes the dollar-denominated revenue that is being earned by Bitcoin miners and compares it with statistical averages. The higher the multiple, the more extreme the price dislocation from norms. At Bitcoin's 2017 peak, the Puell Multiple eclipsed 6. Prior to peaking in 2021, the multiple nearly took out 4. As of November 10th, the Puell Multiple was slightly above 1. Again assuming diminishing returns over time, even if the multiple gets to just 2 again, it would be implying a BTC value closer to $174k per coin. Stock-To-Flow (Bitcoin Magazine PRO) I am not personally a fan of the stock-to-flow model for Bitcoin, but I'd rather show it and comment than ignore it when talking about cycle top price possibilities because I know there are many who do follow it. The biggest reason I don't generally care for this model is because the coin has been well behind the model for most of the last 3 years. If BTC were to "catch up" with the stock-to-flow model, it would imply a price today of $135k BTC and a price of $420k by May. I flat out don't believe that we'll see Bitcoin at $420k anytime soon, and certainly not in the next 6 to 7 months. Fidelity Wise Origin Bitcoin Fund Data by YCharts Buying Bitcoin through the ETF products is going to lead to long term under-performance due to the expense ratio. Compared with other funds like IBIT, FBTC is competitive, judging by the very similar total return since fund inception. But there is one critical difference between these funds that I think tilts the scale in favor of FBTC. I've written previously about the specific reasons why I like FBTC versus other spot Bitcoin ETFs in the past. To reiterate, the biggest reason; the Fidelity Wise Origin Bitcoin ETF does not use Coinbase ( COIN ) as the fund's custodian. I have no issue with Coinbase. I've used it in the past as a customer. As a retail trader, COIN's fees are quite a bit more than I'd want them to be when compared with the spot ETFs. Even in a standard brokerage account, the 25 bps charged by the fund is far cheaper than what a retail trader would generally pay to buy Bitcoin from Coinbase and self-custody the asset. I've done that math in a prior article , and it still checks out. Monthly Exchange Volume (TheBlock) In my view, the relative value offered by the spot ETFs is a big reason why active addresses have been in decline and monthly exchange volume remains well off highs. My longer-term suspicion is that Coinbase will raise custody fees on ETF managers. Since Fidelity self-custodies the Bitcoin held via FBTC, this long-term Coinbase fee risk is diminished. Thus, my spot ETF preference for long-term Bitcoin allocation is FBTC. Thesis Risks The major risk to the FBTC long thesis would be if the price of Bitcoin doesn't continue to rise with global liquidity. There are theoretical scenarios where the price of BTC falls even as global liquidity rises - such was the case for most of the summer during 2024. Prior to the approval of spot ETFs, Bitcoin has historically benefited from a parabolic phase when there has been clear signs of FOMO from retail traders and investors. I don't know that we can conclusively say we have that: Bitcoin purchase interest (Google Trends) Google Trends Search interest for "how to buy bitcoin" hasn't sniffed extremes that we've seen in the past. Though, we can observe a noticeable move higher at the beginning of November. There is perhaps credence to the notion that retail traders already know how to buy Bitcoin, since there were Super Bowl advertisements for cryptocurrency exchanges during the last cycle and spot ETFs exist. But a more fundamental risk is the lack of on-chain active addresses recently would be indicative of a network that is not really functioning as originally intended. Furthermore, a manufactured supply crunch through HODLing an asset isn't necessarily a great reason to be bullish, in my view. Investor Takeaways Despite my skepticism about $420k BTC, or even $200k BTC for that matter, I do think the market is going to take the Bitcoin price to six figures and possibly as high as $135-140k. Where the coin goes from there is anybody's guess. I still think there are a lot of reasons to be cautious about blindly HODLing any coin or token, and BTC is no different. Actual users of Bitcoin have been in decline and scalability continues to be a concern, judging by things like Lightning Network channels. Bitcoin is supposed to be a network for 'the people' not a speculative asset for Wall Street. But we have to trade the reality we have, not the reality we might want. Narratives can be very powerful and few narratives have had the same stickiness as Bitcoin's 'digital gold' narrative over the last decade. There will be a time to be bearish BTC, but we're not there yet.
