VanEck Mid-November Bitcoin ChainCheck

As we anticipated in our September Bitcoin ChainCheck, Bitcoin (BTC) price has surged upward in a high-volatility, post-election rally. Now in uncharted territory with no technical price resistance, we believe the next phase of the bull market is just beginning. This pattern mirrors what happened four years ago, when Bitcoin’s price doubled between the 2020 election and year-end, followed by an additional ~137% gain in 2021. With a transformative shift in government support for Bitcoin underway, investor interest is rising rapidly; we are receiving inbound calls at an accelerating pace as many investors find themselves under-allocated to the asset class. While we remain vigilant for signs of overheating, we reiterate our cycle price target of $180k / BTC as a number of key indicators we track continue to signal green for this rally.

We also hosted an X (formerly Twitter) Spaces conversation with Senator Cynthia Lummis and Michael Saylor, exploring the timing and prospects for a U.S. Bitcoin Strategic Reserve and how more corporations are exploring adding Bitcoin to their corporate treasuries. Listen here.

• Bitcoin’s Price Action
• Key Indicators
• Bitcoin’s Network Activity, Adoption, and Fees
• Bitcoin ChainCheck Monthly Dashboard
• Bitcoin Miners

Bitcoin’s Price Action

Market sentiment: At $89,444, Bitcoin’s 7-day moving average (7 DMA) is at an all-time high. On election night, Tuesday, Nov 5th, Bitcoin surged ~9% to new all-time highs of ~$75k as Polymarket’s odds indicated Trump was winning the race, effectively front-running traditional news outlets’ election calls. This aligns with our previous observations of Bitcoin’s price surging when Trump’s odds improved on Polymarket, such as after his assassination attempt. Trump made Bitcoin and crypto central to his campaign, promising to end the SEC’s regulation-by-enforcement approach and to “make America the world capital for crypto and Bitcoin.”

With Trump as the president-elect, regulatory headwinds are turning into tailwinds for the first time. Trump has already started appointing pro-crypto figures across the executive branch, while the Republican party now holds a unified government, increasing the likelihood of supportive legislation. Such legislation includes proposals like creating a national Bitcoin reserve—the odds of which are trading at 34% on Polymarket as of November 19th—and rewriting crypto market structure and stablecoin draft legislation. Under new leadership, we expect FIT21 will be rewritten in market- and privacy-friendly terms, while new stablecoin drafts will allow state-chartered banks to issue stablecoins without Fed approval.

At a time when nations like BRICS are exploring alternatives like Bitcoin to bypass USD sanctions and currency manipulation, stablecoins offer a strategic opportunity to export the U.S. dollar globally. By removing regulatory hurdles and enabling state-chartered banks to issue stablecoins, the U.S. can defend the dollar’s global influence and capitalize on crypto’s faster adoption in emerging markets, where financial services, hedges against local currency inflation, and DeFi are in high demand.

We expect SAB to be repealed within Trump’s first quarter, if not by the SEC, then by Congress, spurring banks to announce crypto custody solutions. If Gary Gensler hasn’t already resigned, we anticipate Trump will follow through on his promise to replace the SEC chairman, favoring more crypto-friendly candidates and ending the agency’s notorious “regulation by enforcement” era. Additionally, we expect that in 2025, U.S. ETH ETFs will be amended to support staking, the SEC will accept the SOL ETF 19b-4, and in-kind creation and redemption will make these ETFs more tax-efficient and liquid. As Trump has previously acknowledged the shared energy-intensive nature of Bitcoin mining and AI, we anticipate energy deregulation—leading to cheaper, more abundant baseload power (e.g., nuclear)—will drive global leadership in energy, AI, and Bitcoin.

In our view, this election marks a bullish turning point, reversing years of offshoring jobs and capital caused by previous hawkish leadership. By fostering entrepreneurial dynamism, the U.S. is poised to become a global leader in crypto innovation and employment, transforming crypto into a critical industry for domestic growth and a key export to emerging markets.

Bitcoin dominance: The 7-day moving average of Bitcoin dominance, a measure of Bitcoin’s market cap relative to all crypto’s aggregate market cap, rose 2 points to 59% this month, reaching levels not seen since March 2021. While the uptrend from 40% in November 2022 may persist in the near term, we expect it to peak soon. In September, we noted that a Harris victory might favor Bitcoin dominance due to Bitcoin’s clearer regulatory status as a commodity. In contrast, Trump’s pro-crypto stance and growing cabinet will likely spur investment more broadly across the crypto space. With Bitcoin reaching new highs under a pro-innovation regulatory backdrop, wealth effects and regulatory de-risking are poised to attract both crypto-native capital and new institutional investment into DeFi, boosting returns in the long tail of the asset class.

Regional trading: At first glance, traders during Asian market hours appeared to significantly increase their Bitcoin holdings this month, defying a years-long trend of being net sellers to European and US traders. However, Bitcoin’s price surge on election night occurred during Asian trading hours, likely driven by an unusually high proportion of US-based investors trading around the election. This exceptional event complicates attributing such price movements solely to regional dynamics. Consistent with historical behavior, traders during US and European hours continued accumulating BTC, sustaining the price performance trends observed in October.

Source: Glassnodeas of 11/18/24. Past performance is no guarantee of future results.

Key Indicators

To evaluate this bull market's potential upside and remaining duration, we examined key indicators that assess risk levels and potential peaks. This month, we begin our analysis with perpetual futures, or "perps," where funding rates offer insight into market sentiment and help gauge the likelihood of an overheated market.

Sustained High Perp Funding Rates (10%+) Can Signal Overheated Bitcoin Markets

Average BTC Returns Versus Perp Funding Rates (04.01.20 - 11.11.24)

BTC Price Performance When 30 DMA Annualized Perps Fees Exceed 10%

Source: Glassnode as of 11/12/2024. Past performance is no guarantee of future results.

This month, we start by examining perpetual futures, or 'perps'—futures contracts where traders on the more popular side of the market pay a 'funding rate' to those on the opposite side. As markets skew, funding rates automatically rise to incentivize balance and compensate traders for directional risk. Thus, sustained high funding rates may be used to indicate an overheated market.

Starting from April 2020, we analyzed periods when the 30-day moving average perpetual funding rate exceeded 10%. These periods averaged ~66 days with 17% returns from open to close, though individual durations varied significantly. Only one period—the single-day spike on June 18th, 2024—was tactical, reflecting a short-term reaction. All other instances lasted several weeks, highlighting structural bullish sentiment that often drives significant short- to medium-term gains.For example, the high funding rate period starting August 31st, 2021, lasted 23 days, followed by a 28-day cooling-off period before re-igniting for another 51 days on October 19th. Counting this brief gap, the combined duration of elevated funding rates in 2021 totaled 99 days. Similarly, the current high funding rate period, which began on November 12th, 2024, lasted 80 days before a 19-day pause, resuming for another 69 days. Combined, this period spans 168 days, comparable to the 186 days observed from November 11th, 2020, to May 21st, 2021. Notably, Bitcoin purchases made on days when funding rates exceeded 10% yielded higher average returns over 30-day, 60-day, and 90-day time frames compared to purchases on days with lower funding rates.

However, the data also highlights a pattern of underperformance on longer time horizons. On average, purchases made on days when funding rates were above 10% began underperforming at the 180-day mark, with this trend becoming even more pronounced over 1-year and 2-year periods. As market cycles typically span about four years, this pattern suggests that sustained high funding rates often correspond with cycle tops and may serve as early indicators of an overheated market vulnerable to longer-term downside.

Bitcoin Cycle Analysis

Cycle open is defined by the bear market low

Cycle close is defined as the next low

Source: Glassnode as of 11/13/2024. Past performance is no guarantee of future results.

As of November 11th, Bitcoin has entered a new phase where funding rates again exceed 10%. This shift points toward stronger short- to medium-term momentum, as historically, elevated funding rates have been linked to higher 30-, 60-, and 90-day returns, reflecting heightened bullish sentiment and demand. However, as funding rates remain elevated, we may move out of the phase where longer-term (1-2 year) returns are as favorable. Given the current pro-Bitcoin regulatory environment, we anticipate another period of high performance, reminiscent of the post-2020 election phase when sustained 10%+ funding rates drove a 260% gain over 186 days. With Bitcoin currently trading near $90k, our $180k price target remains plausible, reflecting a potential cycle return of ~1,000% from the cycle’s trough to peak.

High Levels of Unrealized Profits Can Signal Peak Prices

Average BTC Returns Versus 30d Moving Average Relative Unrealized Profits (RUP) (11.13.16 - 11.13.24)

Source: Glassnode as of 11/13/2024. Past performance is no guarantee of future results.

Average BTC Returns Versus 30d Moving Average Relative Unrealized Profits (RUP) (11.13.16 - 11.13.24)

Source: Glassnode as of 11/13/2024. Past performance is no guarantee of future results.

Next, we look towards Relative Unrealized Profit (RUP), another metric useful for highlighting overheated Bitcoin markets. Relative Unrealized Profit (RUP) measures the proportion of Bitcoin’s market cap represented by unrealized gains—profits that exist on paper but have not yet been realized through selling. This metric rises when Bitcoin’s price exceeds the last acquisition price for most holders, reflecting optimism as a larger proportion of the market moves into profit.

Historically, elevated 30-day moving average (DMA) RUP levels—especially above 0.60 and 0.70—signal strong market sentiment and potential overheating. As illustrated by the red bands in the chart, RUP 30 DMAs above 0.70 often align with market tops, as the high proportion of unrealized profits triggers profit-taking. Conversely, RUP levels below 0.60 indicate more favorable conditions for long-term buying, with historical data showing higher 1- and 2-year returns for purchases below this threshold.

Our analysis of the past two market cycles suggests that 30 DMA RUP levels between 0.60 and 0.70 tend to deliver the highest short- to medium-term returns (7-day to 180-day). This range ordinarily reflects the middle stages of a bull market, where optimism is rising but not yet excessive. In contrast, RUP >0.70 in aggregate consistently correlates with negative returns across all time frames, reinforcing it as a strong sell signal.

As of November 13th, Bitcoin’s 30 DMA RUP is ~0.54, with daily values exceeding 0.60 since November 11th. According to our detailed table, risks progressively increase as RUP approaches 0.70, emphasizing the urgency of acting within the 0.60–0.70 range for short-term trades. However, if RUP’s 30 DMA rises closer to 0.70, it could signal an overheated market, advising caution for long-term positioning.

Google Search Term Popularity for Crypto in the U.S.

Source: Google Trends as of 11/18/2024. Past performance is no guarantee of future results.

The popularity of "crypto" as a Google search term serves as a strong gauge of retail investor interest and market momentum. Historically, peaks in search interest have closely aligned with crypto market cap peaks. For example, all-time highs in search interest in May and November 2021 preceded significant market drawdowns: a two-month ~55% correction after the May peak and a ~12-month, ~75% bear market following the November peak.

Currently, search term popularity sits at just 34% of its May 2021 peak and slightly below the 37% local peak observed in March 2024, when Bitcoin reached its highest price of this cycle. This relatively low level of search interest suggests that Bitcoin and the broader crypto markets have not yet entered speculative mania, leaving room for further growth before reaching the levels of mainstream attention typically associated with market tops.

Coinbase App Store Rankings

Source: openbb.co as of 11/15/2024. Past performance is no guarantee of future results.

Like Google searches for “crypto,” Coinbase’s App Store ranking is a strong indicator of retail interest in the space. After a lengthy bear market, Coinbase re-entered the top 50 apps on March 5th of this year, following a ~34% surge in Bitcoin price over nine days as Bitcoin retested its 2021 all-time high of ~$69k. Despite Bitcoin reaching new highs of ~$74k later that month, retail interest waned as price volatility declined into the summer doldrums and attention shifted to the presidential race. However, Bitcoin’s election-night breakout reignited retail interest, with Coinbase’s App Store rank jumping from #412 to #9 between November 5th and 14th. This surge in engagement helped drive prices higher, alongside record Bitcoin ETF inflows (see Chart of The Month).

Bitcoin’s Network Activity, Adoption, and Fees

Daily transactions: The 7-day moving average of daily transactions is ~543k, a -15% month-over-month decline. Despite the decline, activity remains strong at the 96th percentile of Bitcoin’s all-time history. Fewer transactions are being offset by larger payloads, as evidenced by rising transfer volumes.

Ordinals inscriptions: Daily inscriptions (NFTs and meme coins on the Bitcoin blockchain) transactions increased 404% month-over-month, reflecting revitalized speculative enthusiasm likely stemming from price increases and regulatory tailwinds.

Total transfer volume: Bitcoin transfer volume increased 118% month-over-month to a 7-day moving average of ~$85 billion.

Average transaction fees: Bitcoin transaction fees fell 5% month-over-month to an average cost of $3.58, representing an average transaction fee of 0.0023% compared to the average transaction payload of ~$157k.

Bitcoin Market Health and Profitability

Percent of addresses in profit: With Bitcoin price trading at all-time highs, ~99% of all Bitcoin addresses are currently profitable.

Net unrealized profit/loss: This ratio increased 21% percent to 0.61 over the past month, indicating a significant increase in the ratio between Relative Unrealized Profit and Relative Unrealized Loss. As an indicator of market sentiment, this ratio sits in the “Belief – Denial” range, corresponding to market cycle phases of accelerated expansion and contraction between cycle peaks and troughs.

Bitcoin ChainCheck Monthly Dashboad

^* DAPP market cap as a proxy, as of Oct 18th, 2024

¹ 30 day change & 365 day change are relative to the 7-day avg, not absolute

Source: Glassnode, VanEck research as of 10/15/24. Past performance is no guarantee of future results.

Bitcoin Miners & Total Crypto Equities’ Market Cap

Mining Difficulty (T): Bitcoin's block difficulty rose from 92 terahashes (T) to 102 T, reflecting miners expanding and upgrading their fleets. The Bitcoin network automatically adjusts difficulty every 2,016 blocks (~two weeks) to ensure blocks are mined approximately every 10 minutes, increasing or decreasing the computational power needed to solve a block. Rising difficulty signals growing competition among miners and a robust, secure network.

Total Daily BTC Miner Revenues: Increased 30% month-over-month, benefiting from Bitcoin’s rally but suffering from a 30% decline in BTC-denominated transaction fees.

Transfer Volume from Miners to Exchanges: On Friday, November 18th, miners transferred ~$181 million in BTC to exchanges—50x the preceding 30 days’ average—driving the 7-day moving average up 803% month-over-month. This extreme move reflects the highest level since March, prior to Bitcoin’s latest halving. While persistently high levels of miner transfers to exchanges can signal an overheated market, this spike follows a summer of relatively low miner selling, suggesting profit-taking for operations and growth rather than a market peak.

Total Crypto Equities’ Market Cap: The 30-day moving average of the MarketVector Digital Asset Equity Index (MVDAPP) rose 47% month-over-month, outperforming Bitcoin. Leading index components such as MicroStrategy and Bitcoin miners directly benefit from Bitcoin’s price appreciation through their holdings or mining operations. Meanwhile, companies like Coinbase capitalize on broader crypto market gains as rising prices drive expectations of increased trading fees and other revenue streams.

Chart of the Month

Source: farside.co.uk as of 11/18/2024. Past performance is no guarantee of future results.

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