Dehydration Bulletin Glassnode Reports Arbitrage Trading Restrictions Boost Bitcoin Price

Title: Highlights of This Week:
1. The End of This Round of Altcoin Season
2. LayerZero: The Battle of Interests Behind the Anti-Rubbing Mechanism
X Viewpoints
1. Axel (@AxelAdlerJr): Investors Remain Optimistic
The Growth Rate reflects the difference between BTC Market Cap and Realized Cap. A positive difference implies that the Market Cap is growing faster than the Realized Cap, indicating investor optimism. When the threshold is greater than 0.002, it suggests an overheated market likely needing a price correction. Currently, it is only 0.001.
2. Dayu (@BTCdayu): When Will the Altcoin Bull Market Come?
When BTC’s market cap is 4T, ETH 0.6T, other altcoins 2T, and stablecoins 0.04T:
In the bull market of 2021, the market caps were BTC 62T, ETH 27T, other 52T, and stablecoins 1T respectively.
It can be seen that there has been a significant increase in stablecoins and coin prices, signaling a bullish market sentiment and a victory for hodlers.
Current market caps are BTC 69T, ETH 22T, other 35T, and stablecoins 1.1T respectively.
Conclusion:
(1) The current inflow of stablecoins is equivalent to the bull market of 2021. Without a significant increase in inflow, supporting a price similar to 2021 is unlikely.
(2) The total market cap of altcoins is slightly lower than the previous round, but considering the current clever manipulation of low circulation and high release of altcoins, the difficulty of increase will be greater than in 2021—when you buy for doubling, they sell to profit a hundredfold.
(3) Overall, ETFs are driven by emotional buying, rather than substance. The cryptocurrency market is already substantial, and the impact of ETFs with billions of dollars in the market is far less than that of Grayscale in the past.
(4) The external flood of money has not arrived yet, but it will. Therefore, a fierce altcoin bull market will happen, but it might not be now. The most ideal situation is to start at a lower price, even lower, as lower is more advantageous.
(5) Perhaps a scenario is that altcoins are low enough, coupled with the upcoming interest rate cuts, to trigger a surge at some point in the future.
3. Tom Dunleavy (@dunleavy): Retail Investors Have Not Returned
YouTube views for popular crypto shows when BTC was at $70k:
– 2021: 4,000,000 views/day
– 2024: 800,000 views/day
Retail investors have not yet returned.
On-Chain Data
CryptoChan: LTH/STH Indicator Suggests Bitcoin Has Not Peaked Yet
The indicator has dropped to 0.5606, marking a level similar to December 8, 2020, and February 17, 2017. It is worth noting that the prices during these three instances were near the peak of the previous bull run ($1.05k, $18.3k, $67k).
余烬: A Whale May Have Sold 3.879 Million ENA
This whale recently transferred the final 3.879 million ENA ($2.79M) to Binance 15 minutes ago. This adds to the 23.239 million ENA redeemed from Ethena 20 hours ago, all of which were transferred to Binance. These ENAs were withdrawn from Binance at an average price of $1.29 and are now transferred to Binance at $0.726, resulting in a loss of $13.12M (-44%).
Market Analysis
Glassnode: Why Is the Influx of US Spot ETFs Not Leading to a Major Increase in BTC Price?
1. ETF Total Proportion
Despite the significant influx of US Spot ETFs, the price has remained stagnant, consolidating. To determine and evaluate the demand for ETFs, the ETF balance (862k BTC) can be compared to other major entities.
– US Spot ETF = 862k BTC
– Mt. Gox Trustee = 141k BTC
– US Government = 207k BTC
– All Exchanges = 2.3M BTC
– Miners (excluding Patoshi) = 706k BTC
The total balance of all these entities is estimated to be around 4.23M BTC, accounting for 27% of the adjusted circulating supply (total supply minus tokens idle for over seven years).
2. Coinbase Deposits Related to GBTC Outflows
Coinbase, as an entity, holds a significant amount of total exchange balances and US Spot ETF balances through its custody services. Currently, Coinbase Exchange and Coinbase Custody entities hold approximately 270k and 569k BTC respectively.
These entities play a crucial role in the market pricing process due to their services to ETF clients and traditional on-chain asset holders. By assessing the number of whale deposits into Coinbase Exchange wallets after the ETF launch, a significant increase in deposit trading volume can be observed.
However, a significant portion of these deposits is related to outflows from GBTC address clusters, which have been a long-standing supply source throughout the year.
In addition to the selling pressure on GBTC when the market rebounds to new highs, another factor recently weakened the demand pressure for US Spot ETFs.
3. Spot Arbitrage Trading Might Be a Key Source for ETFs
Looking at the Chicago Mercantile Exchange Group’s futures market, open interest has stabilized at over $8 billion, previously hitting a historical high of $11.5 billion in March 2024. This indicates that more traditional market traders are adopting spot arbitrage strategies.
This arbitrage involves market-neutral positions, combining buying long spot positions with selling (shorting) the same underlying asset futures contract at a premium.
Entities classified as hedge funds are building increasingly large net short positions in Bitcoin.
This suggests that spot arbitrage trading structures may be a significant source of ETF inflow demand, with ETFs being a tool to obtain long spot exposure. Since 2023, the Chicago Mercantile Exchange (CME Group) has significantly increased its open interest and overall market dominance, indicating that it has become the preferred venue for hedge funds to short futures through CME.
Currently, hedge funds’ net short positions in the CME Bitcoin and Micro CME Bitcoin markets amount to $6.33 billion and $97 million, respectively.
4. Summary
The emergence and scale of spot arbitrage trading between long US Spot ETF products and short futures on the Chicago Mercantile Exchange have largely suppressed inflows of funds into ETFs. This has had a relatively neutral impact on market prices, indicating that organic buyers are needed to further stimulate positive price action.
Research Report Selection
Aaryamann Shrivastava: The Altcoin Season Ending
The changing market conditions have created a bearish sentiment that is undermining the potential of the altcoin season.
1. The End of the Altcoin Season
The altcoin season, also known as “altseason,” is a period in the cryptocurrency market when altcoins outperform Bitcoin significantly. This phenomenon is primarily identified by observing two key indicators: Bitcoin’s dominance and altcoin price performance.
Bitcoin dominance refers to the percentage of Bitcoin’s market cap in relation to the total cryptocurrency market cap. During the altcoin season, as investors shift funds from Bitcoin to various altcoins, this dominance decreases. A significant decline in Bitcoin dominance indicates that altcoins are gaining a larger market share.
The last time such a decline occurred was in January of this year, when BTC dominance dropped sharply from 54% to 50%. However, since then, its dominance has been on the rise, reaching 55% in the past month.
This marks the first time since the collapse in March 2021 that BTC has regained dominance in the crypto market, when its dominance plummeted from 70% to 40% in just a few days.
With the decline in Bitcoin dominance, altcoin prices typically surge. The soaring prices of altcoins usually exceed the growth rate of Bitcoin, signaling the onset of the altcoin season. Investors seek higher returns by diversifying their portfolios into altcoins, thus driving up altcoin prices.
In general, when 75% of the top 50 altcoins (excluding stablecoins) outperform BTC over a three-month period, the altcoin season is considered active and successful.
However, in the past 90 days, only 8 cryptocurrencies have outperformed Bitcoin. Even the meme coin craze and the speculation surrounding Ethereum ETF approvals failed to boost altcoin prices.
This gives a disappointing answer to the above question: the altcoin season ended before it even began.
2. The Next Altcoin Season is Expected in Early 2025
The answer to this question is not straightforward, as the volatility of the cryptocurrency market makes everything highly uncertain. Additionally, developments in the macro financial markets also influence the direction of cryptocurrencies.
However, a pattern has emerged since 2022. August 2022 marked the second-to-last altcoin season, with the Bitcoin season starting six months later. The next and most recent altcoin season began eight months later, in January of this year. Now, five months later, we are witnessing another Bitcoin season.
Therefore, if this pattern continues, investors can expect the altcoin season to start in approximately seven to eight months. This implies that the potential timeline for the next altcoin season will be February 2025.
Nevertheless, remaining vigilant for clues from the overall market and macro financial markets is still wise.