Bitcoin Still Strong Despite Volatility

Happy Friday! Bitcoin continues to trade above $100,000, having navigated a rough patch recently. However, there’s a glimmer of hope as institutional investors are increasingly showing interest and there are signs of accumulation among major holders. Analysts suggest that this indicates a quiet resurgence of confidence in Bitcoin, the largest cryptocurrency by market value.

Today, we noted that Jack Dorsey’s Block anticipates Bitcoin revenue might hit nearly $2 billion in Q3. Additionally, Kazakhstan is set to launch a $1 billion crypto reserve fund by 2026, and JPMorgan has mentioned that IREN’s AI cloud expansion offers long-term benefits, albeit with short-term pressures on its balance sheet.

Let’s dive in!

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Bitcoin Contributes Significantly to Block’s Revenue

Jack Dorsey’s Block brought in $1.97 billion in Bitcoin revenue for the third quarter, making up about a third of its total revenue, even though this is an 18% drop compared to the previous year.

• The fintech company reported $6.11 billion in total revenue for the period, resulting in a profit of $461.5 million, as stated in its latest report filed with the SEC.
• Block experienced an 18% year-over-year increase in gross profit, driven mainly by a 24% rise in Cash App usage and a 9% increase in Square, according to Dorsey’s letter to shareholders.
• However, the adjusted operating income of $409 million and EBITDA of $833 million were lower than what analysts had expected. Bitcoin remains Block’s second-largest revenue stream, following subscription and service revenues.
• Additionally, the cost of Bitcoin for Block decreased to $1.89 billion in Q3, but the 8,780 BTC held on its balance sheet resulted in a remeasurement loss of $59 million this quarter.
• Block’s stock saw a 3.7% dip on Thursday and fell further by 8.2% to about $65 during Friday trades.
• Recently, the company rolled out new fee-free BTC payments for Square merchants and is expanding its Bitcoin offerings, with plans for BitKey wallets and mining equipment.

Kazakhstan Plans $1 Billion Crypto Reserve Fund

Kazakhstan has ambitious plans to introduce a national crypto reserve fund worth between $500 million and $1 billion by early 2026. This fund will leverage some seized and repatriated assets alongside proceeds from state-run mining operations, according to a Bloomberg report.

• Central bank governor Timur Suleimenov indicated that the investments would cover ETFs and crypto firms, but emphasized a cautious stance towards direct cryptocurrency exposure.
• This initiative represents a significant step toward formalizing Kazakhstan’s approach to cryptocurrency after a period of testing with state-led mining operations and tightening regulations on private miners.
• The fund will be managed under the Astana International Financial Center, the key financial hub for blockchain and fintech in Kazakhstan, and may consider foreign partners as well.

IREN’s AI Cloud Expansion Outlook

JPMorgan analysts noted that IREN’s substantial $9.7 billion partnership with Microsoft is likely to bolster its transition to AI infrastructure over the long term. However, they cautioned that the swift expansion could strain its balance sheet, as the company is projected to invest over $9 billion in GPU and data center upgrades within the coming year.

• They have adjusted IREN’s price target for December 2026 to $28, factoring in risks from equity dilution and potential debt conversions alongside anticipated momentum in their AI cloud operations and new partnerships.
• IREN expects the Microsoft deal to yield approximately $1.94 billion in recurring annual revenue, targeting nearly 140,000 GPUs and $3.4 billion in revenue by 2026.
• IREN’s shares were trading around $60 on Friday after a significant drop post-earnings, yet this figure still exceeds JPMorgan’s target, reflecting investor interest in the company’s AI ventures.

Bybit and Backed Team Up for Tokenized Stocks

Bybit and Backed Finance are collaborating to offer tokenized shares from notable companies like Nvidia, Apple, and Microsoft on the Mantle Layer 2 network.

• This partnership will facilitate the movement of assets between Bybit and Mantle, allowing for quicker onboarding and enhanced liquidity. Non-US investors will gain permissionless access to these tokenized stocks.
• Backed’s xStocks has already been integrated with Kraken and a leading Solana DeFi protocol, achieving over $1.6 billion in on-chain trading volume since June.
• There are predictions that real-world assets, including tokenized stocks, might evolve into a multi-trillion dollar market.

Zcash Reclaims Top 20 Spot

Zcash has surpassed a $10 billion market cap, experiencing a significant rise of over 25% recently and reclaiming its position among the top 20 cryptocurrencies after a notable rally.

• The privacy-centered cryptocurrency jumped from $75 to over $700 within six weeks, marking its highest value since 2018 as major cryptocurrencies faced downturns post the historic liquidation event on October 10.
• Analysts attribute this rise to heightened activity, increased wallet capabilities, and new discussions around privacy, with predictions of a short-term target of $1,000 from Maelstrom’s Arthur Hayes.

Upcoming Events

• Next Thursday will see the release of UK GDP figures, followed by US CPI inflation data and unemployment claims. Eurozone GDP statistics are expected on Friday.
• Several crypto projects, including Euler, Axie Infinity, Aptos, Linea, Movement, IOTA, Avalanche, and Wormhole, are anticipated to unlock new tokens soon.
• Events like the Mining Disrupt Conference & Expo, Bitcoin Amsterdam, and Crypto Fest 2025 are just around the corner.

Keep up with The Block’s daily insights for the latest impactful happenings in the digital assets space.