November 2023: Bitcoin’s Bull Run Continues
Research Team
Last Updated: 12/1/2023 | 10 min. read
Bitcoin’s price continued to rise in November and the crypto recovery broadened to a wider array of market segments.
Financial markets relaxed about certain macro risks, including the geopolitical conflict in the Middle East and the risk of a “hard landing” for the US economy.
The combination of “tight” token supply, easing macro risks, and the focus that the US presidential election will bring to excessive government borrowing may be positive for Bitcoin valuations in 2024.
Exhibit 1: Reduction in tail risks contributed to asset market recovery in November
A broader crypto recovery
Exhibit 3: Record high for Bitcoin hash rate
Fundamentals to drive Bitcoin’s price
After a stretch of significant gains, we would now characterize active crypto trader positioning as relatively “long”. Open interest for CME-listed Bitcoin futures reached a record high in November, for example, possibly pointing to rising institutional activity in the market (Exhibit 4). Meanwhile, crypto exchange traded products (ETPs)—including futures-based products in the US and spot-based products overseas—attracted another month of net inflows. Grayscale research estimates that global crypto ETP net inflows totalled $1.3bn in November and have reached $2.2bn for the year as a whole.
Exhibit 4: CME Bitcoin futures open interest at record high
In terms of the short-term market outlook, “long” trader positioning implies that further price appreciation may be harder to come by. Major crypto token prices have appreciated significantly, and a more positive outlook is now priced in. Moreover, there are risks to the outlook that could derail this year’s positive trends. These include a “hard landing” (recession) for the US economy, a resumption of Fed rate increases or fewer-than-expected Fed rate cuts, and/or a long delay in regulatory approval of a spot Bitcoin ETF for the US market. Each of these risks could hold back the crypto recovery, at least over the near-term.
Exhibit 5: Larger share of Bitcoin supply held by long-term owners
[7] Every four years the Bitcoin mining block reward declined by half. The next scheduled halving will occur around April 2024.
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