Data & Insights: Bitcoin’s New High & ETF Reactions to Election News

IBIT Billion Dollar Day 

• Last week, we looked at iShares Bitcoin Trust (IBIT)’s billion-dollar week; well, this week, IBIT hit more than a billion in inflows in a day! 
  • This significant milestone was achieved on November 7th, with the ETF recording $1.12 billion in single-day inflows. 
  • The new ATH surpassed its previous record of $872 million set on October 30th, demonstrating accelerating institutional interest in Bitcoin.
• Inflows coincided with the price of Bitcoin surging to new all-time highs of nearly $80,000 at the time of writing. 
  • The push helped Bitcoin break out of an 8-month range, with prices trading between 73,000 and 54,000 since March this year. 
• The record-breaking inflow helped push IBIT's total assets under management to $33.91 billion. 
  • The Inflow surge occurred amid broader market optimism following the U.S. presidential election. 
  • Effects of the election were felt in both crypto and traditional finance, with the Nasdaq and S&P 500 also reaching record levels.
• Data from Bitwise shows that Bitcoin ETFs have attracted far more capital in their first year than gold ETFs did in their initial year of trading, with Bitcoin ETFs recording more than $20 billion in total inflows. 
  • This comparison suggests a strong institutional appetite and momentum for Bitcoin exposure with sustained inflows supporting the notion that institutional investors are becoming more comfortable with Bitcoin exposure through regulated vehicles. 
• We’re keeping a close eye on whether this price momentum can be sustained into year-end and if we see any of the enthusiasm spill into on-chain activity.

History Often Rhymes

• Four months after having gone live, spot Ethereum ETFs have recorded its highest weekly volumes since the third week of its inception back in August 2024.
  • This past week, Ethereum ETFs have recorded over $1.63 billion of trading volume, up over 44% from the previous week.
  • During its first 3 weeks of trading, the combined volume of all ETH ETFs averaged at ~$566 million per day.
  • From mid-August to the end of October 2024, spot ETH ETFs volume declined and stagnated, averaging just ~$168 million per day.
  • However, this figure has spiked this past week, averaging over $326 million worth of volume per day.
• This pattern of having heightened trading volumes in its first trading weeks, followed by a prolonged period of relative volume downturn before a sustained period of even higher trading volumes is reminiscent of what occurred with the Bitcoin ETFs.
  • For context, during its first 7 trading days, the combined BTC ETFs averaged $2.36 billion worth of trading volume per day.
  • This was followed by a month-long “quiet” period where it averaged just $1.4 billion worth of volume per day.
  • Following this month-long “quiet” period though, BTC ETF volumes exploded, proceeding to average a staggering $5.4 billion worth of volume per day for the next four weeks from February 26th to March 28th, 2024.
  • During this period of heightened ETF volume, the price of BTC itself rose by over 35%, increasing from ~$50,900 to a new all-time high of ~$74,000 in the process.
• Notice the pattern. Initial volume spike from enthusiasm and excitement, a relative period of reduced trading volumes, followed by a sustained and significant increase in volumes, which is accompanied by a similarly notable increase in the price of the asset
  • For reference, this past week, following the highest recorded trading volumes of its ETFs in 3 months, the price of ETH has increased by ~25%, its largest weekly gain in 6 months since May 2024.
  • This is by no means a price prediction or a suggestion to buy, but it is most definitely a metric worth keeping an eye on.

To the Surprise of Absolutely Nobody

• As the title of this section suggests and from what we discussed in last week’s newsletter, to the surprise of absolutely nobody, over $326 million worth of open interest (OI) on Polymarket was decimated in just two days.
  • OI on Polymarket fell from a peak of $510 million to just $184 million following the settlement of the platform’s largest market, where former President Donald Trump claimed victory over current Vice President Kamala Harris.
  • At its peak, OI in favor of Trump winning the presidential election stood at $199.54 million while the opposing OI on Harris peaked at $85.74 million.
• Meanwhile, an additional $80 million in OI on a separate market betting on the winner of the popular vote was also settled around the same time.
  • Here, OI supporting Trump peaked at $35.9 million, while Harris received a higher peak of $44 million, indicating a stronger belief among Polymarket bettors that Harris would win the popular vote.
  • Despite lower confidence in Trump winning the popular vote, the President-elect defied the majority’s expectations, emerging victorious in this category as well, marking only the second time a Republican has won the popular vote since 1988.
• As the US Presidential election has concluded, Polymarket will likely experience a relative downturn in activity, as “election season” draws to a close with the platform likely to rely on markets relating to sporting events in the meantime.
  • Downturns in activity for prediction markets should come as no surprise though, as they often rely on major events to drive participation, leaving the platform relatively quiet in between.

Bears Begone

• The crypto market witnessed remarkable short liquidations on November 6th, with $427 million worth of short positions liquidated across major exchanges including Binance, BitMEX, Bybit, FTX, Huobi, and OKEx. This marks the largest single-day short liquidation event since we began tracking this metric in May 2024.
  • The liquidation cascade coincided with Bitcoin's sharp price movement from $69,480 to $75,670, representing a 9% increase in the 24-hour period following the U.S. elections.
  • This event significantly surpassed the previous record of $266 million set in August 2024, representing a 60% increase over the former high. The August 2024 record of $266M stood for nearly three months.
• Open interest in Bitcoin futures has shown resilience, climbing from $31.64 billion on November 4th to $36.86 billion currently, suggesting continued market engagement despite the liquidation event.
  • The amount of open interest has far exceeded levels from last cycle where we had peaks at $22 billion and $24 billion. However, as the industry grows and more investors enter the market, the amount of open interest it can sustain also rises. 
• The liquidation volume exceeded the total daily average by approximately 3x compared to October's figures.
  • The sustained growth in open interest following this liquidation event suggests the futures market continues to function as an essential mechanism for price discovery. 
• As institutional participation in crypto markets matures, these derivative instruments provide valuable signals about market positioning and sentiment as we head into uncharted territory.

Solana Keeps Pump.ing Out Tokens 

• While Bitcoin captures headlines with new price milestones, Solana continues to dominate new token activity, with 89% of new tokens choosing to launch on the network. 
  • This surge in activity comes as the network processes roughly 41 million non-vote transactions, highlighting sustained user engagement.
• Last week saw 181,000 new tokens appearing on dexes, with a major driver of activity being memecoin launches on platforms like pump.fun.
  • Launch platforms like pump.fun have created efficient infrastructure for token deployment.
  • Despite the high volume of launches, approximately only 1% of these tokens are successfully listed on Raydium. 
  • Solana's ability to handle high transaction volumes without significant fee increases supports continued activity.
• Established memecoins have emerged as top performers over the last week, second only to major Layer 1 tokens such as ETH and SOL.  
  • The trend suggests market participants maintain an appetite for high-risk, high-reward opportunities despite the resurgence of enthusiasm for regulated products like the Bitcoin ETFs.
  • As the broader crypto market responds to the U.S. election results and Bitcoin's new all-time highs, we’re watching to see if this will steal attention away from memecoins. 
  • The contrast between institutional capital flowing into Bitcoin ETFs and retail interest in Solana's memecoin ecosystem highlights the market's broad appeal.
• Looking ahead, Solana's position as the preferred platform for new token launches appears secure in the near term, supported by its technical advantages such as lower fees and quicker transaction times. However, the high failure rate of new tokens serves as a reminder of the speculative nature of this activity.