While most of the ETFs suffered losses, BlackRock's iShares Bitcoin Trust ETF saw a modest inflow. This aligns with the very cautious market sentiment due to the U.S. presidential election taking place. Meanwhile, Deutsche Telekom launched a pilot Bitcoin mining project in Germany, which could stabilize the energy grid by using surplus renewable energy.
U.S. Bitcoin ETFs Shed Millions
Bitcoin exchange-traded funds (ETFs) in the United States recorded their second-largest outflow day on Nov. 4, just ahead of the U.S. presidential election. The outflows across the 11 spot Bitcoin ETFs reached $541.1 million, which made it the largest withdrawal since May 1, when Bitcoin ETFs saw $563.7 million pulled during a week of price drops. The only ETF that registered positive inflows was BlackRock’s iShares Bitcoin Trust ETF (IBIT), which brought in $38.4 million, according to data from CoinGlass.
The outflows happened as Bitcoin traders are trying to reduce exposure ahead of the election. Over the past week alone, BTC’s price fell by over 3%, according to CoinMarketCap. As a result, the crypto king’s price is hovering around $68,000.
Bitcoin ETF flow (Source: Farside Investors)
Fidelity’s Wise Origin Bitcoin Fund experienced the largest outflow on Nov. 4, with $169.6 million withdrawn, followed by the ARK 21Shares Bitcoin ETF, which lost $138.3 million. Grayscale’s two Bitcoin funds also saw large outflows, totaling $153.2 million. The Grayscale Bitcoin Trust (GBTC) alone lost $63.7 million and its smaller counterpart, the mini GBTC, shedded $89.5 million.
Spot Bitcoin ETFs are an investment fund that directly holds Bitcoin as its underlying asset. This allows investors to get exposure to Bitcoin without actually owning it directly. Unlike futures-based ETFs, which track Bitcoin’s price through contracts that speculate on future prices, spot Bitcoin ETFs track the real-time price of Bitcoin itself and hold actual Bitcoin in reserve. This structure gives investors a much simpler way to invest in Bitcoin through traditional markets which provides regulatory oversight, liquidity, and the convenience of trading it like a stock.
This happened after a robust trading week that ended on Nov. 1. During this week, U.S. Bitcoin ETFs saw a net inflow of $2.2 billion, despite ending with a $55 million outflow. According to James Butterfill, who is head of research at CoinShares, a lot of the week’s inflows were driven by optimism surrounding a potential Republican victory, which many in the crypto space see as more favorable for the industry.
Although Kamala Harris and Donald Trump are in a tight race, polls on Nov. 4 showed Harris has a slight lead of about 1.2 percentage points. Trump’s probability of winning, according to crypto betting platform Polymarket, dropped quite a bit from a peak of 67% on Oct. 30 to 53.8% on Nov. 3 before stabilizing at just above 61%.
Presidential election winner odds (Source: Polymarket)
Many people in the crypto community favor Trump’s victory, especially because of his pro-crypto stance that could potentially drive Bitcoin prices higher. Some even speculate that a second Trump term could push Bitcoin to the $100,000 mark.
Bitcoin Volatility Pauses
For now, Bitcoin’s volatility has hit somewhat of a standstill as traders await the outcome of the U.S. election. Analysts at Bitfinex believe this could be the “calm before the storm,” with implied volatility for Bitcoin options currently low in the 40s range.
Although Bitcoin’s forward-looking volatility index reached a three-month high of 65.7 on Nov. 3, it has since dropped to 63.2. CoinGlass data also revealed a decline in open interest as traders are closing large short and long positions on Bitcoin in anticipation of the election results.
While a spike in volatility is expected post-election, Bitfinex analysts also warned that if it doesn’t actually materialize, it could signal a deeper correction on lower timeframes for Bitcoin. The broader market seems to agree with this expectation of heightened volatility after the election. Some traders projecting Bitcoin could swing at least 10% in either direction once the election results are revealed.
Bitcoin dominance is also still high, and reached more than 60% on Oct. 29. Bitfinex analysts pointed out that with BTC absorbing most capital flows, altcoins are struggling, and could face even more challenges if BTC pulls back. Without a new catalyst, altcoins could see very limited recovery in the near term.
Bitcoin's Macro Bounce Delayed Until 2025?
It seems like Bitcoin’s price could remain under pressure until early 2025, especially with the volatility expected from the U.S. presidential election. Keith Alan, co-founder of Material Indicators, recently predicted that while Bitcoin will eventually exceed the macro trend, this bounce is unlikely to happen before the election results are finalized.
According to Alan, a Trump win could trigger a swift positive response from BTC/USD, while a Democratic win could lead to a more subdued market reaction. He also noticed that key support levels, like the 21-day simple moving average and the April 2021 mid-cycle top at $69,000, have struggled to establish themselves as firm support.
In the immediate term, technical support may shift toward the 50-day moving average and possibly the 21-week moving average, though the heightened election-driven volatility could disrupt these technical patterns. Alan suggests that the market may only stabilize when the new government takes office in January and a clearer price recovery path could potentially only emerge in Q2 2025. By this time, he expects Bitcoin to resume its upward trend above the macro trajectory.
Some analysts believe Bitcoin could see new all-time highs in the coming months, with forecasts predicting potential price discovery events and targets around $100,000 in early 2025. Last week, Bitcoin came close to its record high from March. However, should downside pressure continue, Material Indicators warned of a potential retreat to the 50-week moving average, which is currently positioned at $59,200, or even the long-term macro trend line.
Bitcoin Mining to Stabilize Germany's Energy Grid
In other Bitcoin news, Deutsche Telekom, Europe’s largest telecommunications provider, recently announced a new Bitcoin mining project that will use surplus renewable energy. The project is known as “Digital Monetary Photosynthesis,” and is a collaboration between Deutsche Telekom’s subsidiary MMS, Bankhaus Metzler, and Riva Engineering GmbH, with mining rigs to be set up in Backnang, Germany, on the premises of facade manufacturer Riva. It will be managed by Metis Solutions, and its main goal is to transform excess energy from renewable sources like wind turbines into digital assets.
This pilot project was announced right as Germany’s energy grid grapples with fluctuations from renewable sources, creating a need for more grid regulation infrastructure. According to Oliver Nyderle, the head of digital trust and Web3 infrastructure at Deutsche Telekom MMS, Bitcoin mining can help stabilize these energy fluctuations by converting surplus energy into Bitcoin. This approach may serve as a test for Bitcoin miners’ potential regulatory impact on energy grids.
The use of Bitcoin mining for more than economic value is expanding globally. In Finland, a Bitcoin mining initiative that is led by Marathon Digital Holdings provides heat to over 11,000 residents by using recycled heat from mining rigs. Marathon’s facility was launched in June of 2024, and employs “district heating,” which is a system where water is heated centrally and distributed through an underground pipe network. This approach makes use of the huge amount of excess heat generated by mining rigs. It also demonstrates just how Bitcoin mining could play a major role in sustainable heating solutions.
