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Gm Ope,
This week, we discuss Bitcoin's strong performance and it's link to presidential election odds. We analyze onchain data for new buyers and ETFs, evaluating the potential path for the space as the US election is now less than three weeks away.
Network Fees - Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether
BTC fees tripled week over week, as meme coins on Bitcoin resurged after months trending down
Ethereum fees increased by 13%, also driven by trading volumes and meme coins gaining momentum
Exchanges Netflows - The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
Both Bitcoin and Ether recorded negligible net outflows from CEXs
Bitcoin Dominance & Presidential Election Odds
Bitcoin is less than 10% away from it's all time highs. BTC prices have been rising in tandem with the odds for Trump winning the presidential elections.
Trump has also been fundraising for a DeFi project, World Liberty Financial, building a custom market on top of Aave, and is perceived as likely to fire anti-crypto SEC chairman Gary Gensler
Given the inverse stance from the Democratic party, crypto's recent increase of nearly 10% in a week could signal a strong momentum in favor of Trump just as Polymarket shows
But why is Bitcoin rallying more than nearly all coins?
Analyzing market dominance is about so much more than market cap alone.
Our latest perspective dashboard analyzes the dominance of various DeFi categories, token transaction volumes and active addresses with 16 in-depth charts.
Bitcoin Dominance at 3 Year Highs - BTC's market share surpassed 65% for the first time since early 2021
Bitcoin dominance has been climbing steadily for nearly two years
The recent growth towards all-time highs could be partly due to Trump's odds, but more likely due to BTC likely being ready to thrive under either administration
Although Trump would likely be friendlier to crypto in general, the democrat has historically not gone after Bitcoin but rather just smaller coins
Thus, it's likely that in either scenario, BTC could continue increasing regardless of who ends up being president
Under the democrat party, uncertainty for altcoins would increase, decreasing their expected value even with the odds at 60/40 in favor of Trump
This positions Bitcoin as a less risky play at the moment, and seems like new holders are following this path.
Short-term Holders Grow - The percentage of Bitcoin supply held by addresses that purchased within the last 12 months reached a 2-year high
Since the Bitcoin ETFs were launched in January, the share of addresses holding for less than a year has been climbing
This trend has accelerated recently, as the ETFs have seen an inflow of $2.1B over the last five days
In contrast, ETH ETFs have only recorded inflows of $76M, showing significantly less appetite among TradFi investors
Overall, seems like even though Kamala's odds are dropping, the market is shying away from assets other than Bitcoin. Perceived risks for altcoins are much higher than for Bitcoin under a democratic administration, contributing to BTC's dominance climbing to multi-year highs. Ultimately, this story will unfold over the next three weeks as the US elections approach and prospects of them being a positive catalyst for the industry increase.
Webinar: The Next Generation of L2s
Join our upcoming webinar on October 23rd, where we'll dive into the next generation of layer 2 networks. We'll cover upcoming L2s, their background, functionalities, and how they leverage the latest technology. Don't miss out!
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