An external market disruption

BitvavoMar 9, 2026

Financial markets usually move to a recognizable rhythm. But every now and then something abruptly disrupts that rhythm. The sharp rise in the oil price due to the escalation in the Middle East is a good example. At the same time, other forces are at work in the crypto world that are developing more slowly. States are discovering bitcoin mining as a strategic tool, while commercial miners are searching for new revenue models. More on this in this edition of Market News.

Market update

A useful way to understand financial markets is to look at forces operating across three time horizons. Secular forces play out over decades. Think of the rise of new technologies that gradually mature and come into widespread use. There are also secular bull and bear markets. Since the bottom in March 2009, the stock market has been in a secular bull market for 17 years.

In the shorter term, cyclical forces dominate. Virtually every market moves in a rhythm from bottom to top and back again. The most distinct cycle usually lasts 4 to 6 years and is linked to the real economy: economic growth, liquidity, refinancing waves, and election cycles. In crypto, we know this as the cyclical bull and bear markets that return, on average, every four years.

Most of the time, secular and cyclical forces together determine the overall direction. Daily news (the third time horizon) is mostly just noise, barely noticeable when you step back and look at a chart. But every now and then something happens that drowns everything else out, a disruption that sweeps all analysis off the table in a single moment.

The situation in the Middle East has the potential to trigger such a shock. The WTI oil price rose 90% in seven trading days, from 63 dollars to 119 dollars. If that increase continues to above 150 dollars and remains there for a longer period, then we may indeed be facing such a shock. If the situation de-escalates, however, markets will likely fall back into the familiar rhythm of cyclical and secular forces, and the overall picture could suddenly look quite healthy again.

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Countries that mine Bitcoin themselves?

In Paraguay, thousands of Bitcoin mining machines are literally stacked up to the ceiling in government warehouses. These are machines that were seized from illegal mining operations. Where other countries would sell off such equipment, Paraguay is choosing a different path: it plans to start using the machines itself.¹

The government is starting with a pilot project involving approximately 1,500 miners. Paraguay produces a huge amount of electricity very cheaply, thanks to hydropower. The Itaipu Dam alone produces about 14 gigawatts of power, almost enough to supply energy to the whole of the Netherlands. Because the country itself has only seven million inhabitants, a large amount of power remains unused. Bitcoin mining could therefore be a way for Paraguay to make better use of this surplus electricity.

The idea is not new. Bhutan is following a similar path. The Himalayan country began Bitcoin mining in 2019, also powered by hydroelectric plants. Since then, Bhutan has produced more than 13,000 BTC. Part of the proceeds has already been used for public spending, including salary increases for civil servants and the development of a new economic zone.²

For countries with abundant green energy, mining can therefore become a strategic tool. Yet the same activity is under pressure in the commercial sector.

Margins in the industry have shrunk significantly in recent months. Several large publicly listed mining companies are therefore selling part of their Bitcoin reserves in order to cover operating costs or finance investments.

Since October, public miners have collectively sold more than 15,000 Bitcoin. Companies such as Core Scientific, Riot, and Bitdeer are among the sellers. Many miners are now looking beyond Bitcoin alone. Their data centers are increasingly being configured for AI and other compute‑intensive applications, where revenues are more stable than in the still highly competitive mining market.³

That makes the developments in Paraguay and Bhutan particularly interesting. While commercial miners are increasingly looking for new sources of income, some states see bitcoin mining as an opportunity, especially when they have an abundance of cheap energy. In that light, Bitcoin mining becomes less of a pure industry and more of a geopolitical instrument.

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In other news

Morgan Stanley takes a step toward its own Bitcoin ETF. The US bank has filed a prospectus with the SEC for a fund that invests directly in Bitcoin. Coinbase Custody is to act as custodian and BNY Mellon will serve as transfer agent. For Morgan Stanley, this could mean two things: participating in the rapidly growing ETF market and giving Bitcoin a permanent place in its wealth management portfolios. The impact could be significant: the bank has about 16,000 advisors and nearly 10 trillion dollars in assets under management.
Circle tests system for “nano-payments” using USDC. The company aims to enable extremely small payments by bundling them before they are processed on-chain. At present, a payment of, for example, one cent in stablecoins can still be eaten up by transaction fees. But by combining thousands of transactions, the costs drop to a fraction of a cent per payment, according to Circle. The concept is mainly aimed at new applications, such as micropayments for AI services and automated payments between AI agents.
Kazakh central bank plans to invest up to 350 million dollars in the crypto sector. The investment will come from part of the country’s gold and foreign exchange reserves and could be deployed as early as this spring. According to the central bank, the plan is not only to gain direct exposure to cryptocurrencies, but also to invest in companies active in the sector. With reserves of almost 70 billion dollars, it is a relatively small experiment that is still meaningful: central banks are among the most cautious players in the institutional wave moving towards crypto.
Andreessen Horowitz targets new crypto fund of around $2 billion. The venture arm, a16z crypto, aims to close its fifth fund by mid-2026. That is smaller than the previous $4.5 billion fund from 2022, but still one of the largest pools of capital in the sector. Notably, the fundraising begins while the market appears weaker. According to a16z, blockchain technology remains a long-term story, although the industry is increasingly shifting toward financial applications such as stablecoins, tokenization, and staking.

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Satoshi Radio: The latest episode of Satoshi Radio features some notable developments. Block laid off 40% of its staff, and bitcoin miners are increasingly looking to AI as a new revenue stream. We also hear about Kraken, the first crypto company to gain access to Federal Reserve banking services. And bitcoin? The orange coin is holding up remarkably well. Plenty of topics for a packed market update.

This article is for informational purposes only and does not constitute a marketing communication or recommendation. None of the content herein should be considered as investment advice or a substitute for it. Bitvavo makes no guarantees regarding the accuracy or completeness of the provided information. Investments involve risks. There is a possibility of losing your entire invested capital.