Recent reports indicate that there has been a significant increase in demand for Bitcoin (BTC) from institutional investors through spot BTC Exchange Traded Funds (ETFs). This surge in demand has raised concerns about the ability of miners to restore market equilibrium. According to market data, spot BTC ETFs received an inflow of $423.6 million (4,349.7 BTC) in the past week, almost double the 2,250 BTC mined during the same period.
Furthermore, it has been reported that the total inflow into spot BTC reached an astonishing $5.5 billion, highlighting the unprecedented institutional demand amidst current liquidity conditions. Looking at historical data, we can see that an ETF inflow of $817.5 million was recorded in the second week of November. At that time, Bitcoin’s price had dropped by 3% to $86,855. It was confirmed that BlackRock’s IBIT was the leading contributor to this flow with $778.3 million, followed by Fidelity’s FBTC, which added $37.2 million within the week.
Analysts point out that the mismatch between ETF inflows and miners’ production has created a liquidity squeeze, making the asset more susceptible to price sensitivity. On the positive side, continued demand from institutional investors, coupled with declining miners’ production, could potentially lead to a significant increase in the price of Bitcoin. However, if institutions decide to sell off a substantial portion of their holdings, it could result in a significant decline in price.
Bitcoin mining revenue and profit have also experienced a decline. In October, there was a 2% decrease in daily block reward gross profit. JPMorgan research reveals that miners earned $41,800 per hour per second in daily block reward revenue. Additionally, Riot Platforms, the third-largest Bitcoin mining company on Wall Street, reported a substantial loss in revenue for Q3 2024. The loss increased to $154.4 million compared to $80 million in the same period last year. This was mainly attributed to the cost of mining one Bitcoin, which stood at $35,376. Experts also attribute this to the Bitcoin halving event in April, which reduced the mining reward by half, as well as the increasing network difficulty and significant reduction in power credits.
Despite the challenges, Riot’s CEO, Jason Les, emphasized the positive aspects, stating that the company generated $84.8 million in revenue for the quarter, representing a 65% increase compared to the same quarter in 2023. This growth was driven by a 159% year-over-year increase in deployed hash rate to 28 EH/s, allowing for the production of 1,104 Bitcoins in the quarter, in line with the production in Q3 2023.
At the time of writing, Bitcoin is trading at $95.9k, experiencing an 8% decline in the last seven days. Analysts, such as Rekt Capital, suggest that Bitcoin may be entering a multi-week correction phase. They note that historically, week eight of Bitcoin price recovery tends to be corrective, and while week nine also follows a similar trend, it is usually to a lesser extent. Director of trading at Arbelos Markets, Sean McNulty, believes that if Bitcoin breaks below the $90k level, it may lead to further liquidation.
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