Decoding Global Economic Trends and Bitcoin’s Prospects Heading into the 4th Quarter and Beyond
The second half of August witnessed a significant decrease in volatility and volume as the Bitcoin price closed the month down 8% under $58,000. It’s worth noting that August and September traditionally tend to be the weakest months for Bitcoin, so this outcome comes as no surprise. Bitcoin has been consolidating for 181 days now, fluctuating between $50,000 and $72,000. A breakout from this widening range would likely signal a shift in the Bitcoin price’s direction for the foreseeable future. A break up could bring prices above $84,000 and new all-time highs. If the weekly close falls below $49,000, it could potentially lead to extended downward price action, reaching as low as $36,000 in the coming months. Although this scenario is not expected, we cannot disregard the macroeconomic headwinds.
Amidst this context, it’s crucial to note that the mainstream media frequently overlooks essential data painting a rosier picture than what really exists. The goal appears to be to not panic the masses. However, recent trends show a rise in jobless claims not only in the US but also worldwide, while key metrics indicate a significant slowdown in both the global and US economies. These concerning indicators might trigger investor fear, potentially leading to a future sell-off across all markets. To counter a potential economic crisis, central banks are resorting to lowering interest rates. Despite this standard tactic often causing a market sell-off, it’s notable that the European Union and the UK have not experienced this consequence as of this writing. With the Federal Reserve likely to reduce rates on September 18th, there is hope for a soft landing, consequently averting an economic or market crash. Time will be the ultimate arbitrator, but historical data doesn’t appear to be in favor of central banks.
On the other hand, election year market performance stands in favor of the Federal Reserve. With a few exceptions, markets typically grind higher leading up to and spike following an election. In this context, the US economy walks a tightrope between inflation and recession. The next four months remain uncertain. We could witness a recession triggered by a financial event causing massive market sell-offs, or interest rates could provide liquidity to push the markets higher. The M2 money supply has started to turn upward, often signaling investors to move their funds towards riskier assets. Rises in the M2 money supply also indicate potential movements in the crypto market. Bitcoin typically leads the way, but as the money supply grows, the overall crypto market and altcoins, in general, reap the rewards. The question remains: will this trend repeat? Several indicators suggest an imminent Bitcoin run, while others indicate a potential large sell-off and market decline. Uncertainty prevails in the markets, and the reaction to the initial rate cuts will likely offer clues about the direction markets will choose for the final quarter of the year.
The Money Supply Is Growing
Considering Bitcoin’s historical performance, the odds are in its favor. Previous halving cycles in Q4 (2012, 2016, and 2020) yielded substantial gains and reached new all-time highs. Currently, there’s nothing to indicate that 2024 will be any different. Bitcoin is closely tracking the realized gains of 2016 and 2020. Although history doesn’t always repeat, it often rhymes. If this positive correlation continues, Bitcoin could potentially reach an all-time high in November or early December. For now, the most prudent approach is to favor the continuation of the four-year cycle and take advantage of lower Bitcoin prices by following a DCA (Dollar Cost Averaging) strategy. Remember, if you have a 5 to 10-year time horizon on Bitcoin, there is really no bad time to buy.
The Black Line Indicates the current cycle, the Green indicates the previous cycle and the Blue indicates the cycle before that.
When viewed on this chart the current cycle appears to be right on track with the previous two.
https://studio.glassnode.com/workbench/2ccdf5a7-9918-45bd-694e-a55dfa512e16
Altcoins: A Shift in Dynamics
The altcoin market operates as a distinct entity. In 2023, altcoins were in sync with Bitcoin, making gains despite not keeping pace with Bitcoin’s velocity. However, this trend drastically changed over the past 6 months. Virtually the entire market witnessed a decline in value against Bitcoin, prompting investors to divert their funds from altcoins to stable coins. Consequently, the stable coin market cap experienced a substantial increase. Historically, such a surge signifies the calm before the storm for Bitcoin. Savvy investors, perceiving the shift, reallocate their investments to Bitcoin, heralding the final leg of the Bitcoin Bull run. As Bitcoin attains all-time highs, altcoins start benefiting from the accrued profits. Subsequently, Bitcoin’s dominance dwindles as altcoins surge in Bitcoin valuation. This cyclic pattern has been evident in the past, and at present, there are no signs indicating a deviation from this trajectory. Currently, Bitcoin dominance remains at 57.5%, and most analysts, including myself, anticipate it to cap soon around 60%. Until there are indications of a breakdown in Bitcoin dominance, committing new capital to altcoins entails substantial risk.
Macro Bitcoin analyst Ben Cowan has a strong track record when it comes to predicting the Bitcoin and Crypto cycle over the past two years. His analysis primarily centers around factors such as Bitcoin dominance, the Federal Reserve’s easing and tightening cycles, and social metrics linked to public interest. In his recent video, Cowan expresses the prevailing macroeconomic conditions that are having an impact on Bitcoin and outlines how the market might respond to these developments. Given his consistency in providing reliable insights, Cowan’s perspective serves as an invaluable resource to the crypto community. Click here to view his video from September 2nd, 2024 Bitcoin: Wake Me Up When September Ends
Change in Finance, Change in Society
Fix the money, fix the world. The existing financial system doesn’t cater to the needs of most individuals. Recurrent instances of bank fraud continue to plague customers, with banks facing lawsuits yet again for defrauding their patrons. JPMorgan Chase is sued over low rates on cash sweeps | Reuters Opting for a decentralized trustless currency, such as Bitcoin, empowers people to break free from this manipulative system. By fostering financial autonomy, we, as a collective, can shape the conduct of our governments and corporations. Remaining within the current system perpetuates corruption, fraud, and the prevalence of endless wars. Embracing Bitcoin as a mode of payment and supporting businesses that accept Bitcoin can pave the way for a revamped future and world.
The September Journey
This month, I am embarking on a trip to El Salvador to firsthand experience life in Bitcoin country. In San Salvador and Bitcoin Beach, I will immerse myself in the local culture and test the viability of Bitcoin transactions at nearby establishments. My forthcoming blog post will predominantly focus on my excursion and shed light on the lifestyle in a nation with a Bitcoin-centric economy. I aim to evaluate the cost of living in El Salvador, explore the process of making the transition, discover business opportunities and provide insights into the local perception of the transformative impact brought about by Bitcoin.
As always, it’s important to conduct your own research and this is not intended as financial advice.
Links & Tutorials
Bitcoin Education Resources
Hope.com – Learn more about Bitcoin and how to use BTC to protect your wealth.
The Bitcoin Standard – Book by Saifedean Ammous – a must-read!
The Bitcoin Way – Go bankless! Bitcoin education and services to help you custody your Bitcoin safely and securely.
Swan Bitcoin – Bitcoin exchange, IRAs and institutional-grade custody solutions
River Financial – Bitcoin exchange and institutional-grade custody solutions
God Bless Bitcoin – Full Length Documentary
Freedom People Resources
People Pay – Accept Bitcoin payments for your business
Chainrecorder – Prove ownership immutably by recording your documents on the Bitcoin blockchainÂ
U.S. Regulated Exchanges (Fiat Onramps)
Coinbase – Using Coinbase Advance Video
Kraken – Using Kraken Pro Video
KYC Credentials Outside the U.S.
Palau ID – Foreign residence to pass KYC on foreign exchanges.
KYC Exchanges that Accept Palau ID (Must Use VPN – Costa Rica, Columbia, Mexico, Panama)
No KYC Exchanges (Must Use VPN – Costa Rica, Columbia, Mexico, Panama)
DEXs (Decentralized Exchanges) – Best Wallet To Use
Jupiter – Video Solana Ecosystem – Phantom Wallet
Whales Market – Solana OTC Trade Desk – Phantom Wallet
Thorswap – Swap native assets cross-chain (BTC for ETH etc..) and a very unique decentralized Bitcoin lending platform. Works best with the XDefi Browser Wallet. Decentralized Bitcoin lending platform. Thorswap Overview Video Loans On Thorswap Video
Osmosis – Cosmos Ecosystem – Rabby, Metamask
Spooky Swap -Fantom – Rabby, Metamask
Trader Joe – Avalanche Ecosystem – Rabby, Metamask
Crypto Market and Portfolio Tracking
CoinGecko for portfolio tracking and up-to-date prices
CoinMarketCap – Crypto Prices
Banter Bubbles – Crypto Prices – Social Sentiment
Trading View – Chart all Markets and trading pairs Tradingview Tutorial Video
Storage – Not your keys, Not your crypto!
Cold Storage Wallets (Secure Long-Term Storage of Your Crypto)
Cold Card (Bitcoin Only) – Video
Hot Wallets (Lower Security – interact with DAPPS and Smart Contracts)
XDefi Browser Wallet – Video1 Video 2
Warning-If you have a wallet and an NFT has been sent to your wallet that you did not mint or purchase.. NEVER click on it. Many have malicious code that can drain your wallet! – BE CAREFUL
Stay Free!
Kury
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