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Bitcoin Rallies to Surpass $35,000 as Spot ETF Approval Looks More Likely

November 1, 2023

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Stay up to date with our monthly market commentary:

  • The market is pricing in the potential approval of a spot Bitcoin ETF.
  • Bitcoin reached a new yearly high of $35,000.
  • Misinformed reporting sent the Bitcoin price soaring for an hour. 
  • Bitcoin (BTC) is up 27%, while Ether (ETH) is up 6.7% compared to last month.*

Market Overview - October

The price of Bitcoin (BTC) increased in October by 27%, reaching a new yearly high of over $35,000. 

The primary driver behind the rally has been news-driven, relating to the potential approval of the much-awaited spot Bitcoin ETF. 

Initially, there was a misinformed report by Cointelegraph that claimed the SEC approved the spot Bitcoin ETF by BlackRock. Within minutes, the price of Bitcoin surged by 10% on the back of this “fake news.” 

Once the SEC and BlackRock clarified this was misinformation and nothing had been approved, the price dropped again. 

However, from that point forward, market sentiment remained positive, and the price continued to climb, suggesting that the market was starting to price in the approval of spot Bitcoin ETFs. 

Towards the end of the month, we were able to see more and more pro-Bitcoin statements from Wall Street CEOs and would-be spot Bitcoin ETF issuers amending their filings in the hopes of fulfilling the SEC’s approval criteria, positively affecting the price. 

Generally, there has been increased reporting about Bitcoin ETFs on financial media outlets like CNBC, Bloomberg, and Fox Business News. It seems like the public is interested in understanding what’s going on and what investors can expect in the future. 

We still need to wait for the final approval by the SEC (most likely until January) and follow updates about the approval process. October proved that demand for these products exists and that many investors would prefer the SEC to approve sooner rather than later. 

Crypto Asset Market Performance Review 

October, widely known as “Uptober” in the Bitcoin community for its historically strong performance, didn’t disappoint and had all major crypto assets in the green. 

Bitcoin (BTC) and Solana (SOL) were the standout performers in October, rallying by 27% and 60.7%, respectively.

Most popular altcoins grew by around 5%, ending the month in the green, with some investors suggesting that we may soon witness the next “alt season” (altcoin season) as Bitcoin has historically pushed up the values of other crypto assets when it rallies. 

For example, Solana outperformed Bitcoin, rallying by more than 60% and becoming the top-performing crypto asset of the last month.

While the BTC rally helped to buoy the price of SOL, other drivers for Solana’s price jump include an increase in users, new use cases for smart contract applications, and more interoperability for the ecosystem with other smart contract-enabled blockchains.  

Bitcoin Tech Update

October has been an exciting month for the Lightning Network ecosystem, with significant updates to hardware wallet providers and the introduction of a new protocol enabling the issuance of fiat and tokens on the network.

Hardware Wallet Providers Integrate the Lightning Network

Blockstream and BitBox both announced hardware wallet integrations for the Bitcoin Lightning Network. 

Bitcoin infrastructure company Blockstream announced on stage at the Bitcoin Amsterdam conference that they would integrate Lightning into their Green Wallet, with further support for their popular Blockstream Jade hardware wallet expected next year. 

Swiss hardware wallet provider BitBox similarly announced that they would be integrating the Lightning Network in their native BitBox app. While only the app itself can use Lightning, every user can back up their Lightning wallet on their BitBox hardware wallet. 

These two announcements suggest that many new Bitcoin investors will be onboarded directly via the Lightning Network, benefiting from low-cost transactions and high transaction speeds, as they will soon be able to “stack sats” directly into cold storage.

Fiat and Tokens Can Now Be Issued on the Lightning Network

The long-anticipated launch of Taproot Assets by Lightning Labs happened on October 18, marking a big moment for the Lightning Network. 

This will allow developers to issue assets, such as tokens or fiat-pegged currencies, on top of the Lightning Network, benefiting from Lightning’s speed, low-cost environment, and the ability to fully customize their assets to their needs. 

This could be a game changer for remittance services, enabling users to send fiat currency over the Lightning Network in seconds and at a minimal cost. Moreover, Taproot Assets is also attractive for businesses and financial institutions that want to issue a tokenized version of their assets on the Lightning Network.

The Lightning Network Grew by 1,212% In the Last Two Years

River released their latest Lightning report, in which they took a closer look at the ecosystem’s growth and what was driving this adoption. 

According to River, the Lightning Network grew by 1,212% in the last two years with the following use cases as the main drivers: 

  • Gaming, with rewards being paid in Satoshis
  • More exchanges accepting and using Lightning
  • Tipping on social media or within protocols
  • Micropayments, as rewards for online content
  • Commerce, both online and offline, at conferences
  • Remittances between the US, Europe, Africa and South America

These use cases resulted in roughly 6.6 million routed payments within the Lightning Network in August 2023 alone. This likely does not include payments that are routed privately.

According to River, the amount of Lightning nodes increased as well. At the time of writing, there are roughly 15,000 Lightning nodes.

One thing is clear: The Lightning Network is growing rapidly, and with further developments such as Taproot Assets and RGB, we can expect an increase in both use cases and users on the Bitcoin Lightning Network.

Institutional Interest in Bitcoin

October has also been an eventful month for institutional investors, with announcements of new fillings and a market-wide enthusiasm for spot Bitcoin ETFs.

Wall Street Experts Publicly Voice Support for Spot Bitcoin ETFs

Many prominent Wall Street CEOs, pundits, and regulators were outspoken in October about the future of spot Bitcoin ETFs. 

Amongst them was Larry Fink, CEO of BlackRock, who sat down for an interview with Fox Business News in which he explained BlackRock’s shift towards Bitcoin, how they envision a future with spot Bitcoin ETFs, and how Fink thinks about the digital asset ecosystem. 

Ark Invest’s Cathie Wood, one of the most vital advocates for the approval of spot Bitcoin ETFs, also appeared in an interview with CNBC, where she explained the demand her company sees from clients and how she increasingly has more discussions with fellow asset managers anticipating their ETFs’ approval. 

Furthermore, we didn’t just see applicants publicly supporting the approval of said ETFs but also regulators. SEC Commissioner Hester Peirce said in an interview with CNBC Squawk Box that she was always confused as to why we haven’t seen the approval of spot Bitcoin ETFs. 

These interviews and displays of public support indicate strong institutional interest and suggest that various spot Bitcoin ETFs could provide a valuable entry point into the ecosystem for both consumers and institutions.

*Closing price data is from October 30, 2023*