Bitcoin Data Report: September 2024

Oxido Solutions uses a data-driven approach, which is reflected in our Bitcoin trading bot solutions built on technical analysis. To keep ourselves and you informed about the latest data trends in the world’s top cryptocurrency, we’ve put together a detailed breakdown of the most important BTC data from August, along with our expert insights on what these trends could mean for Bitcoin going forward.

1. Bitcoin’s Volatile August 2024

Bitcoin (BTC) price showed volatility in August 2024. The month began with a price of $65,264 on August 1, but quickly dipped to $51,329 by August 5, representing a decline of 21% in five days. This downward trend reversed, with the price climbing back up to $64,387 on August 23. However, BTC’s price closed out the month at $59,845, which represents a 8.6% month-over-month drop.

This drop was driven by increased market volatility and a general “risk-off” sentiment across financial markets. A major contributor was the collapse of the yen carry trade, where investors borrowing Japanese yen at low interest rates were forced to close out their positions, leading to a sell-off in risk assets like Bitcoin.

On top of that, key Bitcoin metrics saw a decline, with active users falling by 10% and transaction fees down by 12%. Continued regulatory uncertainty in the U.S. also contributed to the negative outlook, especially following a Wells Notice from the SEC to NFT marketplace OpenSea.

2. Bitcoin Benchmark Performance

To put August’s performance in perspective, here’s a comparison of Bitcoin’s performance against various benchmarks, including our own BTC Perp Multi Strategy at Oxido Solutions:

3. Bitcoin ETFs Face Headwinds

3.1. Bitcoin ETFs Face Slowdown Amid August Market Fluctuations
In August 2024, U.S. spot Bitcoin ETFs saw a mixed performance, starting with modest outflows and ending with significant pullbacks. The month began with an outflow of $80.69 million on August 2, but inflows picked up over the next two weeks, reaching $32.59 million for the week of August 9-16 and $506.37 million from August 17-23. Despite this brief recovery, the momentum didn’t last, and from August 24 through early September, ETFs recorded substantial outflows, totaling $983.31 million by September 6​.

By mid-September, cumulative inflows for Bitcoin ETFs had reached $17.30 billion, although this was significantly lower than earlier in the year. Analysts have emphasized that stronger institutional demand through Bitcoin ETFs is crucial for driving Bitcoin prices higher​.

3.2. Institutional Investors and ETF Performance
BlackRock’s iShares Bitcoin Trust (IBIT) remains the most successful Bitcoin ETF, bringing in $20.91 billion in total inflows by mid-September. On August 26, IBIT recorded its largest net inflow in over a month, totaling $224.1 million. Fidelity’s Wise Origin Bitcoin Fund (FBTC) is in second place with $9.64 billion in inflows, followed by the ARK 21Shares Bitcoin ETF (ARKB) with $2.356 billion. In contrast, Grayscale’s Bitcoin Trust (GBTC) saw major outflows, losing $20.04 billion​.

In terms of professional investment, Goldman Sachs, Capula Management, and Avenir Tech were among the top buyers of Bitcoin ETFs in the second quarter of 2024. Together, these firms purchased almost $1.3 billion in Bitcoin ETF shares​.

3.3. Global Impact: Hong Kong and Nasdaq
Hong Kong’s Bitcoin ETFs crossed an important milestone in August, surpassing $256 million in assets under management (AUM). Net inflows in Hong Kong for the month totaled $259.24 million, demonstrating growing interest from regional investors​.

Meanwhile, Nasdaq announced its plan to launch Bitcoin index options to offer more flexibility for institutions and traders looking to hedge their positions. These options would allow traders to lock in a predetermined price for Bitcoin at a future date, adding another tool for risk management. However, the product still awaits regulatory approval from the U.S. Securities and Exchange Commission (SEC)​.

3.4. Regulatory Delays and Acquisitions
The SEC delayed its decision on approving a new ETF that would combine Bitcoin and carbon credit futures. This ETF, filed by Tidal Investments, now faces a new deadline of November 21​.

At the same time, Bitwise announced its acquisition of the Osprey Bitcoin Trust (OBTC), adding $120 million in assets to its portfolio. OBTC unitholders will receive Bitwise shares in return, with the deal expected to close by year-end.

4. Bitcoin Miners Face Economic Struggles in August 2024

Bitcoin miners faced significant financial challenges in August 2024, marking the worst month for miner profitability in over a year. Rising competition and operational costs made it harder for miners to stay profitable, pushing some to seek alternative revenue streams or expand their operations through acquisitions to boost their hashrate.

4.1. Decline in Miner Revenues
The Bitcoin network’s computing power, measured by its hashrate, hit a new all-time high of 742 exahashes per second (EH/s) in early September. This increase in hashrate, driven by more powerful mining equipment like application-specific integrated circuits (ASICs), has made mining more competitive and expensive. As miners invest in more hardware and energy, their operational costs have soared​.

In August, miner revenues dropped by over 10.5%, down to $827.56 million from $927.35 million in July. The decline was driven by a combination of higher mining difficulty and falling transaction volumes. The April 2024 Bitcoin halving event, which cut block rewards by 50%, also squeezed miner profits​.

Miners produced 13,843 BTC in August, slightly less than July’s total of 14,725 BTC. As profitability fell, some miners began selling off Bitcoin reserves, though this selling pressure began to ease towards the end of the month​.

4.2. Adapting to the Challenges
To address these financial challenges, some mining companies have started exploring new revenue opportunities, such as moving into high-performance computing (HPC) and artificial intelligence (AI) data processing. Companies like IREN, Hut8, Hive Digital Technologies, and Core Scientific are leveraging their existing facilities for these new applications to diversify their revenue​.

According to an analysis by VanEck, if miners dedicate around 20% of their energy capacity to AI and HPC by 2027, they could potentially generate an additional $13.9 billion in annual profits​.

Other miners are turning to renewable energy solutions to maintain their edge. For instance, Marathon Digital (MARA) is experimenting with landfill-gas-to-energy systems, converting methane from landfills into electricity. This shift aligns with the growing emphasis on sustainable mining practices in the industry​.

4.3. TeraWulf Expanding Operations
In a bid to stay competitive, TeraWulf, the world’s sixth-largest Bitcoin mining firm, is launching a new mining facility at the end of September 2024. The company is also exploring potential partnerships with major tech firms like Alphabet, Amazon, and Microsoft to further diversify into AI and HPC​.

The Bitcoin mining industry is undergoing rapid changes, with rising costs and tougher competition pushing miners to innovate. Despite these pressures, many in the industry are finding ways to adapt by exploring new technologies and sustainability efforts, ensuring the industry’s resilience.

5. Bitcoin Ecosystem Expands as Adoption Accelerates

Bitcoin’s ecosystem is growing rapidly, with innovation across multiple sectors driving new use cases and adoption. From new financial products to blockchain-based solutions, Bitcoin is proving its versatility in 2024.

5.1. 21.co Launches Bitcoin Wrapper on Ethereum
On September 3, 21.co, the company behind 21Shares, launched a new wrapped Bitcoin token on the Ethereum network called 21BTC. This token adds to 21.co’s existing lineup of wrapped tokens for networks like Avalanche, Polkadot, and Solana. Wrapped Bitcoin tokens allow users to utilize BTC on other blockchains, like Ethereum, while maintaining the value of Bitcoin.

The timing of 21BTC’s release is significant, as the most popular wrapped Bitcoin, wBTC, has faced some scrutiny recently. Concerns arose when its custodian, BitGo, proposed a partnership with BiT Global, a Hong Kong-based crypto exchange. This move raised eyebrows in the community, with some investors questioning the security and transparency of wBTC’s custody arrangement. With over $9.1 billion in market capitalization, wBTC is still the largest wrapped Bitcoin, but 21.co’s new token could give it some competition​.

5.2. Babylon Bitcoin Staking Mainnet Launch
On August 22, Babylon officially launched phase one of its Bitcoin staking mainnet. This new platform allows users to stake their Bitcoin using smart contracts, offering a new way for Bitcoin holders to earn rewards. Babylon’s platform has already attracted over 12,710 stakers, performing more than 20,600 staking transactions.

Staking on Proof of Stake (PoS) networks offers a third use case for Bitcoin, beyond being a store of value and a payment method. This development introduces a new layer of functionality for Bitcoin, further expanding its role within the broader crypto ecosystem​.

5.3. SatLayer Secures $8 Million in Pre-Seed Funding
In another boost for Bitcoin’s ecosystem, SatLayer, a Bitcoin restaking platform built on the Babylon protocol, raised $8 million in a pre-seed funding round. The round was co-led by Hack VC and Castle Island Ventures. Originally targeting $4 million, the project exceeded its goal, highlighting strong investor interest. SatLayer’s restaking service offers a new way to secure Bitcoin networks and provide additional utility for BTC holders​.

5.4. Runes Transactions Decline as Bitcoin Dominance Grows
While Bitcoin continues to dominate its network, daily Runes transactions have seen a decline over the past two months, averaging around 50,000 per day. Initially, the Runes protocol led in daily transactions following its launch in April, but Bitcoin has since reclaimed a dominant position, accounting for about 90% of network activity. The remaining activity is divided between Ordinals, BRC-20 tokens, and Runes.

Although Runes transactions briefly spiked in late August, reaching 32% and 28% of network activity on August 23 and 28, respectively, this surge was short-lived. By September 1, Runes transactions dropped back to 3%, as Bitcoin’s presence continued to grow​.

6. Bitcoin’s NFTs See Overall Decline

In August, Bitcoin ranked third in overall NFT sales, trailing Ethereum and Solana. Despite outperforming other contenders, Bitcoin NFT sales saw a drop compared to the previous month. According to CryptoSlam, Bitcoin NFT sales fell by 22%, from $77.3 million in July to $60.5 million in August. The number of transactions also dipped, decreasing 15% from 119,000 in July to 101,000 in August​.

User activity took a hit as well. The number of sellers dropped by 17%, going from 35,000 in July to 29,000 in August. Buyers also decreased, falling 22% from 49,000 in July to 38,000 in August, signaling a cooling interest in Bitcoin-based NFTs​.

Despite the downturn, some Bitcoin NFT projects maintained their dominance. NodeMonkes led in sales, although its total dipped by 25%, bringing in just over $7 million. Ordinal Maxi Biz followed with over $6 million in sales, a 10% drop from the previous month. Bitcoin Puppets took third place, bringing in $5.6 million, but it saw the largest decrease, falling 37%​.

6.1. Key NFT Launches in August
Some new projects launched in August drew attention despite the overall decline in activity:

DMT Ninja (Aug. 1 – Aug. 8): This collection features manga-style NFTs crafted by a team of experienced Japanese creators. Known for its unique hand-drawn traits, DMT Ninja offered a fusion of Japanese art and blockchain.

NeonStacks by BlockMachine (Aug. 7 – Aug. 14): A vibrant digital cityscape collection where users could interact with and customize their NFTs, creating a more immersive experience with “Sats” to trigger special effects.

CryptoAngels by Trevor Jones (Aug. 8 – Aug. 15): This collection of 7,777 NFTs was a follow-up to Jones’ Archangel Collection. Each NFT is highly collectible, featuring a variety of designs aligned with different Archangels​.

Despite a challenging month for Bitcoin NFTs, projects like these continue to push the boundaries of digital art and blockchain. Whether this dip is a short-term lull or part of a larger trend remains to be seen, but the ecosystem continues to evolve with fresh ideas and innovations.

7. Institutional Activity Around Bitcoin in August

August saw several key developments in institutional investment related to Bitcoin. One of the big takeaways was that major bank asset managers were among the top holders of U.S. Bitcoin spot ETFs. By the end of the second quarter, these institutions held a combined total of around €4.3 billion worth of Bitcoin spot ETFs for their clients. Notably, Goldman Sachs and Morgan Stanley were the largest individual holders, with ETF holdings valued at approximately €380 million and €170 million, respectively​.

In another significant move, Morgan Stanley allowed its financial advisors to recommend Bitcoin spot ETFs to select clients, making it the first major U.S. bank to take such a step. This decision is a major milestone, especially considering the bank’s network of over 15,000 financial advisors​.

7.1. European and Asian Institutional Interest
Across the Atlantic, Capula Investment Management, a hedge fund based in London, disclosed holdings of over €420 million in BlackRock and Fidelity Bitcoin spot ETFs in a filing with the U.S. Securities and Exchange Commission (SEC). This positions Capula as one of the largest Bitcoin ETF holders in Europe​.

Meanwhile, in Asia, South Korea’s National Pension Service (NPS), the world’s third-largest public pension fund, announced it had purchased 24,500 shares of MicroStrategy for approximately €30 million. MicroStrategy, which holds about €12 billion worth of Bitcoin, is seen as a way to gain exposure to Bitcoin without directly purchasing the cryptocurrency. This purchase highlights the growing interest from institutional investors in indirect Bitcoin investments​.

7.2. Sony’s Ethereum Layer 2 Announcement
In a separate development, Sony made headlines in late August with the announcement of Soneium, an Ethereum layer 2 scaling solution. Soneium aims to combine Web3 technology with everyday internet services, offering solutions in sectors like entertainment, gaming, and finance. Sony is partnering with Chainlink for the project, which will enter the competitive Ethereum scaling space, potentially boosting the broader blockchain ecosystem​.

These developments reflect growing institutional interest in Bitcoin and blockchain technology, as major players from different regions and industries continue to expand their involvement.

8. Final Thoughts August 2024: Mixed Signals and Key Decisions Ahead

August was a turbulent month for Bitcoin, marked by price swings, varied on-chain activity, and major shifts in the ecosystem. The price briefly dipped below $60,000, and miners faced profitability challenges. However, the broader picture showed positive trends like ecosystem expansion, increasing institutional adoption, and the development of innovative financial tools.

Bitcoin’s short-term price direction is closely tied to multiple factors, with U.S. monetary policy standing out as a key driver. If the Federal Reserve leans toward a more flexible stance, it could push more investors toward riskier assets like Bitcoin, potentially boosting its price.

While some metrics were down—such as miner revenues—there was still strong investor interest, as evidenced by the steady increase in new Bitcoin addresses. However, long-term growth in price may depend on how much users interact with the network itself. New products like BTCz and Babylon’s staking protocol have added more functionality to Bitcoin, which could attract a wider audience.

The selling pressure from miners has lightened, which might indicate a shift towards accumulating Bitcoin rather than selling it off immediately. Still, with energy costs rising and mining becoming more competitive, the long-term sustainability of mining operations will require close attention.

One challenge that remains is the slowdown in Bitcoin ETF inflows. To reignite institutional interest, regulatory clarity is essential. If larger asset managers get more involved, Bitcoin could see a renewed push toward new price highs.

The mix of opportunities and challenges means that Bitcoin’s future, especially in the near term, hinges on macroeconomic factors and how the broader ecosystem continues to develop.

Disclaimer: The opinion expressed in this blog is for general informational purposes only and is not intended to provide specific advice or recommendations for any individual or on any specific exchange, security or investment product. Past performance is no guarantee for future results.