US Spot Bitcoin ETFs Reverse Inflow Streak, Tether Hits New Heights, and Bitcoin Price Approaches $70K

Takeaways

• US spot bitcoin ETFs saw $79 million in net outflows Tuesday, reversing a seven-day inflow streak that had brought in over $2.6 billion: The outflows came mainly from Ark and 21Shares' ARKB fund.
• Bitcoin prices inched closer to $70,000 at the start of the week when futures open interest surged to over $40 billion: But prices subsequently pulled back mid-week as investors pared their gains.
• Tether’s USDT has hit a record $120 billion market cap, which could set the stage for a bullish October finish in the crypto market: Historical trends suggest that a rise in stablecoin supply can precede rallies in bitcoin and ethereum.
• Bitcoin's hashrate has reached a new peak of 703 EH/s, a 6% gain over the past week: This surge coincides with higher mining profitability as transaction fees rise and Bitcoin's price strengthens.
• Binance exec leaves prison: Binance’s Tigran Gambaryan was released from Nigerian prison Wednesday so he can receive medical treatment for the numerous ailments he suffered while in captivity.

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US Spot Bitcoin ETFs Record $79 Million in Outflows, Ending Seven-Day Inflow Streak

After a week-long run of positive net inflows, US spot bitcoin ETFs reported a shift back to the negative on Tuesday, with net outflows totaling $79.09 million. It was ARKB fund from Ark and 21Shares was responsible for the entirety of these outflows, losing nearly $135 million. Despite the overall outflows, some funds still recorded gains. BlackRock’s IBIT, the largest spot bitcoin ETF by net assets, attracted just under $43 million, while Fidelity’s FBTC saw $8.85 million in inflows.

The recent outflows bring the cumulative net inflows for the 12 spot bitcoin ETFs down to $21.15 billion as of Tuesday. Trading activity also slowed, with the total daily volume for these ETFs declining to $1.4 billion from $1.76 billion the day before. This reversal comes after the ETFs saw more than $2.67 billion in net inflows over the past seven trading days, a figure similar to their peak inflow levels recorded in March this year.

Spot ether ETFs saw more positive activity, with net inflows of $11.94 million on Tuesday – all from BlackRock’s ETHA. Other ether ETFs recorded no change. Trading volume for ether ETFs also noticeably dropped to roughly $118 million on Tuesday, down from around $163 million the previous day.

Bitcoin Briefly Nears $70K as Record Open Interest Fuels Market

A surge in futures open interest caused bitcoin to rally near the $70,000 mark at the start of the week, before paring most of its gains. Open interest in bitcoin has reportedly now exceeded $40 billion, the highest on record. This rise also followed continued market speculation around the potential impact of the upcoming US election on crypto regulation.

Cash-margined open interest also hit new highs, with the Chicago Mercantile Exchange (CME) accounting for the lion’s share of this activity. Analysts note that the rise in leveraged bets and open interest alongside price gains supports a bullish outlook for bitcoin’s performance in the near future.

Ether also saw upward price movement around the same period, reaching a peak of around $2,761 on Monday before returning to pre-rally levels. Some analysts have suggested that in recent months, ether performance tends to fairly closely mirror that of major US stock market indexes.

Tether's USDT Reaches $120B Market Cap

Tether’s USDT reached a $120 billion market capitalization on Sunday, according to Tether’s website. This marked an all-time high for the most widely used stablecoin.

In August this year, Tether issued $1.3 billion in new USDT over five days following bitcoin’s dip to a five-month low. By August 9, bitcoin had seen a price surge of more than 20%. The recent surge in Tether’s supply is reminiscent of these conditions, suggesting the potential for a similar rally during this year’s "Uptober.”

While a strong inflow of USDT to exchanges has historically increased crypto prices, a drop in these inflows has historically led to market corrections, as seen in August when bitcoin fell below $60,000. Analysts will now wait-and-see whether the effects of Tether’s recent milestone will have a tangible impact for the wider markets.

Bitcoin Hashrate Surpasses 700 EH/s, Driven by Increased Profitability

Bitcoin's hashrate recently reached a new milestone, exceeding 700 exahashes per second (EH/s) for the first time. The seven-day moving average for hashrate hit 703 EH/s, representing a roughly 6% rise over the past week. The increase comes as Bitcoin's mining profitability has shown broad gains. The rise in hashrate reflects the growing computational power dedicated to securing the Bitcoin network. Since the halving in April this year, the Bitcoin network's hashrate has grown by close to 13%.

Industry analysts have noted that publicly-traded miners, including MARA Holdings (MARA) and Riot Platforms (RIOT) have been gaining market share, contributing over 28.9% of the total hashrate as of September. Leading mining companies have experienced significant growth over the past year, as the price of bitcoin has roughly doubled over the last 12 months.

Meanwhile, small-cap mining companies continue to face challenges in sustaining operations as block rewards halve every four years. In any case however, the Bitcoin mining space has shown a healthy recovery in comparison to this time last year.

Binance Exec Released from Nigerian Prison

Nigerian authorities released Binance executive Tigran Gambaryan from prison on Wednesday after dropping tax evasion and money laundering charges against the crypto industry veteran. Gambaryan had suffered a range of health issues while being held in custody for eight months, including malaria, double pneumonia and a herniated disc, the latter of which left him on crutches during a recent court appearance.

Nigerian officials arrested Gambaryan in February while blaming Binance’s dealings in Nigeria for the country’s vast economic crisis. Gambaryan twice petitioned for release, citing his deteriorating health, but was denied each time. While in captivity, he garnered support from a collection of US officials who increasingly pushed for his release. Gambarayan reportedly departed Nigeria for the US on Thursday.

Binance hired Gambaryan, a former IRS agent, as the head of financial crime compliance in 2021 to help the exchange to help prevent cyber attacks and other threats.

-The Gemini Team