Research Summary
The report provides an in-depth analysis of Bitcoin’s performance, focusing on the impact of the approval of Bitcoin ETFs, the growth of the Lightning Network, and the rise of Bitcoin-native DeFi applications. It also highlights the U.S. government’s significant holdings of Bitcoin, seized from various sources since 2020.
Key Takeaways
Bitcoin ETFs Attract Significant Inflows
- ETF Approval Impact: The approval of 11 Bitcoin ETFs by the SEC led to significant trading activity, with $29B traded in the first two weeks. iShares and Fidelity captured the majority of inflows, while Grayscale experienced outflows.
- Grayscale’s Market Dominance: Despite outflows, Grayscale’s GBTC still dominates the Bitcoin ETF market with over 70% market share, totaling over $20B.
Lightning Network’s Growing Popularity
- OKX’s Rise: OKX, a centralized exchange, has grown its Lightning Network capacity by 19% year-to-date, becoming a top 10 Lightning node. This indicates the growing popularity of the Lightning Network among centralized exchanges.
- Lightning Network’s Capacity: Despite a 9% drop from its peak, the Lightning Network’s capacity remains high at 5K BTC, with USD-denominated TVL near 2023 highs above $210M.
Bitcoin-Native DeFi Applications on the Rise
- Atomic Finance’s Growth: Atomic Finance, a Bitcoin-native DeFi app, has seen significant growth, with an average investment size of 0.29 BTC per user and a total value locked (TVL) of 117 BTC.
- Discreet Log Contract (DLC) Uptick: There has been a notable increase in the number of DLCs generated through Atomic Finance, with a record of 3227 DLCs created to date.
U.S. Government’s Significant Bitcoin Holdings
- Government Seizures: The U.S. government has seized at least 215k BTC since 2020 from various sources, making it a major holder of Bitcoin, controlling roughly 1% of the total supply.
Actionable Insights
- Monitor ETF Performance: Given the significant inflows into Bitcoin ETFs following their approval, it would be prudent to closely monitor their performance and impact on the broader Bitcoin market.
- Assess Lightning Network’s Growth: The growing popularity of the Lightning Network among centralized exchanges could have implications for Bitcoin’s scalability and transaction speed. Stakeholders should assess the potential impact of this trend.
- Explore Bitcoin-Native DeFi Applications: The rise of Bitcoin-native DeFi applications like Atomic Finance suggests a growing market for such tools. Stakeholders should explore these applications and their potential to drive Bitcoin’s utility and value.
- Understand Government Influence: The U.S. government’s significant Bitcoin holdings could potentially influence the Bitcoin market. Stakeholders should understand the implications of this and other government actions related to Bitcoin.
