"What Happened to Bitcoin ETF?" Newsletter: MicroStrategy Stock is Soaring – Volatility and Fiat-Bitcoin Carry Trade Strategy

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Welcome to "What Happened to Bitcoin ETF?”

In this week’s edition, we’re bringing you the key highlights from October 7 (Mon) to October 11 (Fri). We’ll provide a concise and insightful analysis of the Bitcoin ETF market, along with a review of Bitcoin’s overall performance during this period.

Weekly Bitcoin ETF in Numbers

• Total AUM of Bitcoin ETFs (as of October 11):

  $58,447,377,274 (Last week: $57,742,311,438)

  ₿930,480 (Last week: ₿925,893)

• Total Weekly Net Flow (October 7~October 11):

  +$705,065,836 (Last week: -$3,313,103,498)

  +₿4,588 (Last week: -₿4,301)

• Top Weekly Performer:

  BlackRock (IBIT): +₿2,230

• Worst Weekly Performer:

  Grayscale(GBTC): -₿748

1/ Weekly Macro and Bitcoin Price Dynamics:

Bitcoin Rises Amid China Fiscal Stimulus Uncertainty and Trump’s Rising Odds

Bitcoin saw a notable rise this week, climbing to its highest level in two weeks as market participants responded to mixed signals from China’s fiscal stimulus efforts. It surged by 3.5% on Monday, peaking at $64,900, before settling slightly lower. Smaller altcoins such as Ether and Solana also posted gains.

China’s latest efforts to revive its economy have raised more questions than answers. A weekend policy briefing failed to deliver clear details about the amount of fiscal stimulus the government intends to deploy. Concerns are mounting that these measures might fall short in combating deflation, and investor sentiment in Chinese equities is cooling off after a rally that outperformed other global markets.

Caroline Mauron, co-founder of Orbit Markets, highlighted the market’s reaction, noting that the disappointing China stimulus is being viewed positively for Bitcoin. Investors are rotating capital back into crypto assets as China’s equities market loses its shine.

Meanwhile, the U.S. presidential race has also influenced crypto markets. Recent shifts in prediction markets have given Donald Trump, a pro-crypto Republican candidate, higher odds of victory than his Democratic competitor, Vice President Kamala Harris. This is providing a tailwind for Bitcoin and other digital assets.

Adding to the positive sentiment, the bankrupt Mt. Gox crypto exchange pushed back its repayment deadline for creditors to October 31, 2025, delaying the return of approximately $2.9 billion worth of Bitcoin. This has relieved market fears of a massive Bitcoin sell-off by creditors, which would have added downward pressure on prices.

According to Magnet Capital’s co-CIO, Benjamin Celermajer, “The improvement in Trump polling amplifies the market’s receptiveness to positive news like the Mt. Gox repayment delay.”

Bitcoin is currently little changed for October, a month that has historically delivered strong performance for the cryptocurrency, with an average gain of 20% over the past decade. Fundstrat’s head of digital-asset strategy, Sean Farrell, emphasized that Bitcoin’s seasonal strength tends to concentrate in the latter half of the month.

2/ Weekly ETF Flow Breakdown:

Ending Holdings on October 11 (Weekly Change):

• IBIT (BlackRock): 369,640 BTC (+2,230 BTC)

• GBTC (Grayscale): 219,858 BTC (-748 BTC)

• FBTC (Fidelity): 180,086 BTC (+2,160 BTC)

• ARKB (Ark 21Shares): 47,828 BTC (+524 BTC)

• BITB (Bitwise): 39,555 BTC (+556 BTC)

• BTC (Grayscale Mini): 33,396 BTC (-356 BTC)

• HODL (VanEck): 11,907 BTC (+170 BTC)

• BRRR (Valkyrie): 8,982 BTC (+0 BTC)

• BTCO (Invesco Galaxy): 8,273 BTC (+53 BTC)

• EZBC (Franklin Templeton): 7,103 BTC (-1 BTC)

• BTCW (WisdomTree): 3,708 BTC (+0 BTC)

• DEFI (Hashdex): 144 BTC (+0 BTC)

Total: 930,480 BTC (+4,588 BTC)

Last week, U.S. Bitcoin spot ETFs saw a net inflow of $348 million, driven by large inflows on October 7 and October 11, where combined inflows exceeded $200 million. However, small outflows were recorded from October 8 to October 10. The only ETF with a notable net outflow was Grayscale’s GBTC, which lost $31.5 million over the week.

In terms of individual fund performance, BlackRock’s IBIT led the way with a total inflow of $140 million, followed by Fidelity’s FBTC, which recorded a net inflow of $138 million. Other ETFs, including BITB and ARKB, saw smaller inflows, while GBTC experienced outflows despite the overall positive trend.

3/ Looking Ahead:

South Korea’s FSC to Reassess Spot Cryptocurrency ETFs and Institutional Custody

In a significant development for the cryptocurrency market, South Korea’s Financial Services Commission (FSC) has announced plans to reevaluate the ban on spot cryptocurrency ETFs and institutional account custody. This move comes in response to growing pressure from lawmakers, with both the ruling Democratic Party and the opposition pledging support for local spot Bitcoin ETFs during this year’s election campaigns.

Since 2018, institutional investors in South Korea have been restricted from opening trading accounts on crypto exchanges, limiting their ability to participate in the burgeoning digital asset market. This potential policy shift could open up new investment opportunities for institutions and further drive crypto adoption in the region.

Bitcoin ETF Options Expected in Q1 2025

Looking forward to the U.S. market, Bloomberg analyst James Seyffart anticipates the launch of Bitcoin ETF options in the first quarter of 2025. Speaking at the Permissionless conference on October 9, Seyffart suggested that options linked to BlackRock’s Bitcoin ETF (iShares Bitcoin Trust, IBIT) could arrive sooner, though the first quarter of 2025 remains more likely.

The SEC recently authorized Nasdaq to list these options, but final approvals from the CFTC and Options Clearing Corporation (OCC) are still pending. Unlike the SEC, the CFTC and OCC are not bound by strict deadlines, meaning further delays could occur. However, if approvals come through, this could mark a key milestone in the expansion of Bitcoin derivatives trading in the U.S.

4/ 🔥What’s Trending Now?:

Why MicroStrategy’s Stock is Soaring: Volatility and Strategic Bitcoin Purchases

MicroStrategy (MSTR) has seen its stock price skyrocket by 210% year-to-date, vastly outperforming Bitcoin’s 42% gain in the same period. There are two main reasons for this impressive performance:

1. Volatility-Driven Investor Demand:

One of the primary reasons for MSTR’s soaring stock price is its volatility, which significantly exceeds that of Bitcoin itself. Traditionally, stock prices tend to become less volatile as they rise, but MSTR has defied this trend. Its stock volatility increases in tandem with Bitcoin’s price, offering an attractive opportunity for institutional investors who seek high-risk, high-reward assets. Investors who are restricted from directly purchasing Bitcoin, such as in countries where spot Bitcoin ETFs are banned, can gain exposure to the cryptocurrency through MSTR. The stock serves as a Bitcoin proxy with 2-3 times the volatility of Bitcoin, amplifying its appeal to those looking to capitalize on Bitcoin’s price movements.

2. Strategic Borrowing and Bitcoin Purchases:

MSTR’s innovative strategy of issuing convertible bonds to borrow cash and purchase Bitcoin has significantly enhanced its profitability. By purchasing Bitcoin with borrowed capital at low interest rates, MicroStrategy has created a leveraged Bitcoin fund with a return profile highly dependent on Bitcoin’s price appreciation. For example, MSTR has purchased $8.3 billion worth of Bitcoin, which now holds a market value of around $15 billion, delivering a 55% gain on their Bitcoin holdings. This, combined with the company’s manageable interest expenses (an average rate of 1.569% on the bonds), means MSTR is generating 53.4% annual returns from its Bitcoin investments alone.

This unique model of leveraging low-interest debt to purchase Bitcoin has positioned MicroStrategy as a high-reward play on Bitcoin’s long-term growth. CEO Michael Saylor has even hinted at plans to increase the company’s Bitcoin holdings to $150 billion, further fueling speculation about the company’s growth potential.

5/ This Week’s Bitcoin Mindset:

Decoding the Inflation Narrative

This week, we're diving into the real meaning behind inflation numbers, inspired by a thought-provoking comic from The Little Hodler and echoed in my recent tweet that cuts through the noise:

This concise dialogue perfectly captures the average person's struggle with understanding inflation. When headlines trumpet "inflation has dropped," many hope for immediate relief. However, the reality is far less comforting:

1. Lower inflation doesn't mean price decreases - it just indicates a slower rate of increase.

2. Our purchasing power continues to erode, albeit at a slightly reduced pace.

3. Savings still lose value over time in an inflationary environment, even with improved numbers.

The punchline? We're essentially celebrating getting poorer more slowly. It's a sobering realization that underscores why many turn to alternative assets like Bitcoin.

As a deflationary asset with a fixed supply, Bitcoin offers a stark contrast to fiat currencies that consistently lose value over time. While Bitcoin's price may fluctuate, its fundamental properties present a potential hedge against the insidious effects of inflation.

In this economic landscape, staying informed and considering diverse stores of value becomes crucial. Whether you're a Bitcoin enthusiast or just exploring crypto, understanding these economic principles is key to navigating our rapidly changing financial world.

Remember, while we can find humor in these situations, the underlying issues affect real people and economies. Stay vigilant, stay informed, and perhaps keep that party hat ready for the next "less bad" economic report.

🍫 BITCOIN CRUMBS ON THE TRAIL 🍫

Dive into this week's crunchy bites of important news, serving up the freshest updates and insights from the Bitcoin world.

Here's what's on the menu:

1. 'Bitcoin' search volume drops to a yearly low, while 'memecoin' surges

   Google search volume for "Bitcoin" has reached 1-year lows, while search interest in memecoins continues to grow and could soon reclaim...

2. Veteran Trader Peter Brandt Issues Bitcoin Warning, Says 75% Decline on the Table After Lengthy Consolidation

   Seasoned trader Peter Brandt is warning that Bitcoin (BTC) has historically witnessed a massive meltdown after failing to print new record...

3. Michael Saylor Delivers Impressive Bitcoin Strategy Insight By U.Today

   U.Today - "If you want to win, you need a Bitcoin strategy" — that's how Michael Saylor, the CEO of MicroStrategy and one of the main...

4. Google Removes Bitcoin and Crypto Price Charts from Search

   Google has removed live price charts for Bitcoin and other cryptocurrencies from its search results. Users have noticed that queries like...

5. A China ‘Tsunami’ Has Suddenly Hit Crypto As The Bitcoin Price Smashes $65,000

   Bitcoin and crypto have surged after China announced it would further support its economy with monetary stimulus...

That’s it for today; stay tuned for more updates and insights in our next edition!

Stay charged,

SmashFi Team

P.S. - Follow me on X (@brianhoonjong) for daily insights on Bitcoin, wealth, and more! 🚀🐦

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Disclaimer: This newsletter is for the brainy and the brave. It's for informational purposes only and not a substitute for investment advice. Always do your own research.