Sophia’s Thoughts on Uptober’s Arrival
The first few days of October were lackluster. Until false news about a Bitcoin ETF sparked a hype that pushed Bitcoin to a 1.5-year high. What’s next?
These are Sophia's Thoughts:
The excitement about a possible approval of spot Bitcoin ETFs pushed Bitcoin above USD 35,000, even if for a brief moment. That’s the highest Bitcoin price we’ve seen since May 2022.
Several altcoins also benefited from the run, including Chainlink and Solana. Each gained more than 30% in the last week.
Sophia is seeing a slow improvement in crypto fundamentals. That can provide an additional boost for coin valuations as we approach the next bull run.
But there are still many risks before a spot Bitcoin ETF gets approved. Investors should exercise caution and not fall for FOMO.
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🚀 Last week’s market performance
Bitcoin (BTC) rallied hard! It gained 16% in the last 7 days. That provided a strong lift for the crypto market, which gained a cumulative 14% over the week. But one of the biggest winners of the week was Chainlink (LINK). It gained an astonishing 40% in just the last 4 days. The “biggest” loser among the largest coins last week: Helium (HNT). It lost just 1% in the last 7 days.
🧐 What is your crypto mood today?
In each Sophia's Thoughts newsletter, we ask about your crypto mood. Your response to this question helps Sophia get a better sense of the pulse of crypto markets. And this ultimately translates into better insights for you when combined with Sophia's AI models. Your data empowers Sophia to provide you with even better intelligence going forward!
😁 An ETF-driven Bitcoin rally
Last week, Cointelegraph reported that a spot Bitcoin ETF had been approved. That news turned out to be false. But it triggered a new wave of hype and excitement in crypto markets in anticipation for when an actual ETF will be approved.
Crypto investor sentiment turned positive last week. And sentiment for the broader crypto market caught up with sentiment for individual coins. This is significant because we measure sentiment for the crypto market from online news, some of which may not be crypto specific, as well as social chatter. The fact that it is now positive tells us that the broader perception of the crypto market has improved over the last 7 days.
The star of all the hype was Bitcoin (BTC). Even though a spot Bitcoin ETF has not yet been approved, several developments last week suggest that this might happen sooner rather than later:
SEC decided not to appeal the decision in the Grayscale. Now, the SEC has been ordered to reconsider Grayscale’s application to convert its Bitcoin Trust into a spot Bitcoin ETF. Most don’t expect that the SEC will reject the application for another reason. That opens up an avenue for a spot Bitcoin ETF in the near future.
Then there was the strange story about BlackRock’s proposed spot Bitcoin ETF appearing on the website of the Depository Trust & Clearing Corporation (DTCC) under the ticker IBTC. Many noticed this yesterday and that led to a 10% jump in the price of Bitcoin. But today, it seemed as though the listing had been removed from the DTCC website. Then the DTCC website crashed. Then we learned that the listing had already appeared on the DTCC website since August. For full transparency, this is what it all means. The DTCC is in charge of clearing and settling the transactions of many ETFs. Essentially, the DTCC makes sure that transactions in an ETF are carried out at the right prices and recorded properly (ahem, what the blockchain can already do automatically). BlackRock had gained eligibility to be listed on the DTCC in August and that’s why it has since been appearing on the DTCC website. But the listing does not tell us much about the prospect of an ETF getting approved. The boom yesterday was just another hype-induced frenzy.
The latest deadline for a spot Bitcoin ETF approval is next year in the spring. But the market is seemingly preparing for an approval much earlier than that. The excitement has pushed Bitcoin to break through the USD 35,000 mark. That’s the highest price we’ve seen for Bitcoin since May 2022 — or 1.5 years ago!
🍾 Sparkly altcoins
While Bitcoin is having its moment currently, several other coins have also seen the valuations boosted. Uptober has certainly arrived!
Chainlink (LINK) posted an incredible 40% return in the last week. This rally was driven by a recent announcement that Chainlink will be launching a new staking feature later this year. The launch has been highly anticipated by the community.
Solana (SOL) has been breaking through all expectations. It has gained 33% in the last 7 days. Solana has enjoyed incredibly strong sentiment on social chatter lately. It also played a role that fears about large FTX liquidations of Solana did not materialize.
Aave (AAVE) gained 30% in the last week after its derivatives trading volume surged.
Polygon (MATIC) gained 19% as investors turned optimistic on the prospects of adoption for the Polygon system.
Filecoin (FIL) also gained 19% as it continues to benefit from the hype around AI applications.
Other big coins also saw their prices jump up.
Many investors expect Ethereum (ETH) to be the next crypto to receive approval for a spot ETF. Grayscale has already dipped its toes in these waters. It filed an application with the SEC to convert its Ethereum Trust into a spot Ethereum ETF. Ethereum gained 10.2% this week.
Ripple (XRP) had originally boomed in July after it won in a lawsuit with the SEC. But, almost all of those gains were wiped over the lackluster summer. Now, the tides appear to be turning. Last week, the SEC dropped its lawsuit against Ripple Executives Brad Garlinghouse and Chris Larsen. The associated announcement appeared to suggest that the SEC is admitting defeat. That gave Ripple new power and its price jumped up 9.6% in the last week.
🍀 Is it sustainable?
Many of the crypto bull runs of the past have been driven by strong sentiment. But, without the support of strong fundamentals, it is hard for prices to remain high when the hype dissipates. We saw that earlier this summer when crypto rallied after the Ripple lawsuit win. But it all drizzled out fairly quickly.
We’re starting to see signs that things are different this time around. Sophia’s mood has increasingly become bullish for coins. A lot of it has to do with the fact that the strong positive sentiment is boosting coin valuations right now. But strengthening fundamentals also plays a role. Sophia perceived fundamentals to be hurting crypto valuations previously while the FTX trial was in the minds of investors. This adversity has weakened in the last 7 days, providing more breathing room for the crypto market.
One thing to keep in mind, though, is that it is very unlikely that the SEC will make a move in the next few days. It may take a few more months until a spot Bitcoin ETF is actually approved. And a lot can still happen until then.
More negative news from the Sam Bankman-Fried trial could dampen the excitement.
The SEC might reject Greyscale’s application to convert its Bitcoin Trust to a spot Bitcoin ETF once again.
The Fed may take more aggressive actions to curb inflation, reducing the risk appetite of investors.
The US Government may shut down if Congress cannot elect a new Speaker by mid November, again reducing the risk appetite of investors.
The best thing investors can do now is to remain informed and monitor the market. Indicia’s Sophia and Pallas services offer AI-powered tools that empower you to do exactly this so you can be optimally prepared for the next bull run. Join Indicia Labs now!
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