The Wolf Den #1052 - Is The Bull Market Officially Back?
Charts say so...
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In This Issue:
Is The Bull Market Officially Back?
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Visa Is Ready For Tokenization
The FTX News Is Annoying
Ethereum ETFs Will Have Options… Eventually
Stand With Crypto Reassess Kamala Harris
Massive Bull Run Could Be Closer Than You Think!
Is The Bull Market Officially Back?
We’re just a few days away from the end of September, a month notorious for being the worst in terms of average Bitcoin returns. Fortunately, this time it's closing on a different note.
At the start of the month, it looked like Bitcoin was in for its usual September struggles, but as we approach the end, it’s turning out to be a surprisingly strong month for Bitcoin holders.
Does this mean the market is front-running the anticipation of an epic Q4 run-up? Maybe. But I wouldn’t jump to conclusions just yet. It could just as easily be an end-of-the-month fake-out or a precursor to a flip-flop between October and September. There’s simply no way to know for sure. That said, I’m starting to feel bullish—there's a good feeling inside.
Part of the reason I’m not surprised by this strong finish is that everyone in the space was in agreement that September would be abysmal, and early on, it looked like that prophecy was coming true. In hindsight, it was the perfect setup for the market to catch everyone off guard and front-run the starting line.
This is exactly why I said two weeks ago, “We’re not out of the woods yet, but by the time everyone agrees we are, most of the gains will have already been made. This isn’t financial advice, but if buying fits your strategy, go for it. I have a feeling you won’t be disappointed in a few months.”
Of course, I might look foolish in two weeks if Bitcoin drops back to the mid-50s, but if that happens, you have two simple options: hold or buy more.
Speaking of consensus, I want to expand on a few ideas I have about the notion that crypto is poised to boom this fourth quarter—this is the most widely accepted idea circulating right now.
Consensus trades typically don’t unfold as the consensus expects, but there’s nuance to consider. There’s a distinction between consensus within our space and consensus outside of it.
For example, there was consensus in the space that Solana was dead after FTX—yet we all know how that consensus trade played out. At the same time, it’s also widely agreed at all stages of cycles that Bitcoin is the greatest cryptocurrency and will be worth a lot more over the next decade. Some consensus trades prove true, and others don’t, so what’s the difference?
The difference between these two consensus trades lies in what they depend on to become true. Solana’s comeback wasn’t going to happen because of outside rescue efforts. It relied entirely on a few purely crypto contrarians—developers, hedge funds, and thought leaders—who believed Solana was different, and they made it happen. Nobody outside our bubble cared about Solana then.
Bitcoin, on the other hand, is a consensus trade within the crypto space, but its growth is driven by global adoption. Unlike Solana, Bitcoin doesn’t rely on our money to move the needle—its rise is fueled by broader, worldwide adoption. Sure, Solana and Ethereum may eventually get there, but right now, Bitcoin is the only consensus trade that will grow regardless of how much consensus we have on it within our echo chamber.
Bitcoin is past the point of consensus.
Ethereum and Solana are approaching that point.
Now that we’ve sorted out the nuances of consensus trades, I want to assess the consensus that Bitcoin will do well in Q4, and that the rest of the market will follow into the new year.
If you tuned into the Crypto Town Hall Spaces yesterday, you might have a sense of where I’m headed. During the show, Bitcoin finally crossed the $65,000 mark—it was a pretty epic moment for everyone watching. My hesitation in expressing my bullishness in that moment was that I felt like I was joining the crowd of people who already agreed, which I always try to steer away from.
THAT SAID…
The idea that Q4 is going to be good for crypto seems, dare I say, to be the only right answer. The premise for my thinking is simple: this is where it starts.
You’ll notice that the post above was from March 18, 2024, when Bitcoin was trading around $67,000. To give that post its proper context, take a look at the following post from the previous March:
Chartception.
The point here is that the 4-year cycle is still intact, and any claims to the contrary are just noise. We’ve been stuck in a grueling downward/sideways channel for seven months—eerily similar to earlier phases in this cycle. If that’s not enough of a catalyst to push Bitcoin higher once it breaks out, well, you might as well unsubscribe, close this publication, unfollow me, and sell all your coins. Just kidding—kind of.
It might be consensus within our echo chamber that the market is heading higher this 4th quarter, but outside of it, that belief is still scarce. There's so much runway left. Bitcoin is past the point where being a consensus trade in our space matters. It’s just beginning its journey toward becoming a global consensus trade. Eventually, the trade may get oversaturated, but that’s a distant destination.
I’m bullish.
I can’t predict what the market will do for the remainder of September, but I’m fully convinced that any dips are now buying opportunities, if they happen. Bitcoin is poised to close above $65,000, then surpass $70,000—the all-time high—and continue much higher. Anyone who thinks $100,000 is the cycle top needs to think bigger.
“Uptober” awaits, and I hope you all have a great weekend! Also, don’t forget to touch some grass; we’re going to be glued to our devices when this thing goes parabolic.
Godspeed.
Bitcoin Thoughts And Analysis
The good news - Bitcoin has officially made a higher high, breaking above $65,000 and ended the bearish market structure. It barely closed above yesterday, so I would really like to see more follow through and volume.
That said, there are potential bearish divergences on many time frames, right here around the key resistance. I’m keeping a close eye on this.
Altcoin Charts
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
Quick reminder that TOTAL 3, which is the crypto market cap minus bitcoin and ethereum, looks poised for a major breakout on the weekly chart, to be confirmed on Sunday. This is a serious signal that altcoins should go on a rally. Let’s hope.
Quick update on the chart I shared the other day - DOT has officially broken out and looks ready to run. Nothing surprising here, altcoins look good across the board.
That said, many have already made a higher high, and DOT has not - meaning this is not officially back in a bull structure. We need a break above $5.10.
Legacy Markets
US stock futures took a breather as traders awaited the release of the Federal Reserve’s preferred inflation gauge, the PCE data, with S&P 500 and Nasdaq 100 futures dipping slightly after hitting record highs earlier in the week. The S&P 500 recorded its 42nd all-time high for 2024, while Nasdaq 100 futures slipped 0.2%, with Nvidia leading declines in pre-market trading. US Treasury yields and the dollar remained stable.
In Japan, the yen surged 1% against the dollar after Shigeru Ishiba won the leadership of Japan’s ruling party, positioning him as a supporter of the Bank of Japan's plan for gradual interest rate hikes. The leadership change boosted confidence in Japan’s economic outlook, adding to the mixed global market sentiment.
In Europe, the Stoxx 600 index climbed, reflecting its best weekly performance since mid-August. The gains were driven by optimism over China’s recent economic stimulus measures, which boosted luxury and mining stocks. Meanwhile, European bond yields fell following lower-than-expected inflation data in Spain and France, which increased the likelihood of further European Central Bank rate cuts.
In China, the CSI 300 Index rallied 4.5%, marking its best week since 2008. The People's Bank of China launched an aggressive policy campaign, unveiling a strong stimulus package aimed at shoring up the economy. Heavy trading volume in Chinese markets led to some glitches at the Shanghai Stock Exchange, but the overall market sentiment remained buoyant. Copper prices rallied back above $10,000 per ton, and iron ore also saw gains.
Oil prices steadied after a sharp two-day drop but remained on track for a significant weekly decline amid expectations of increased supply from OPEC members Saudi Arabia and Libya. Meanwhile, gold was poised for a third consecutive weekly gain as traders remained optimistic that the Federal Reserve will continue cutting interest rates aggressively.
Overall, the global markets reflected a cautious optimism, driven by ongoing central bank policies, particularly China’s stimulus efforts and the anticipation of key inflation data in the US.
Key events this week:
Eurozone consumer confidence, Friday
US PCE, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:29 a.m. New York time
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.3%
The MSCI World Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro fell 0.1% to $1.1163
The British pound fell 0.2% to $1.3391
The Japanese yen rose 1.2% to 143.13 per dollar
Cryptocurrencies
Bitcoin rose 1.4% to $65,578.41
Ether rose 0.6% to $2,647.26
Bonds
The yield on 10-year Treasuries was little changed at 3.79%
Germany’s 10-year yield declined three basis points to 2.15%
Britain’s 10-year yield declined one basis point to 4.00%
Commodities
West Texas Intermediate crude rose 0.2% to $67.80 a barrel
Spot gold fell 0.3% to $2,663.95 an ounce
Visa Is Ready For Tokenization
Another day, another major company diving into tokenization. If I had to pick one underappreciated crypto narrative this cycle with massive implications, it’s tokenization. This time, Spain-based Banco Bilbao Vizcaya Argentaria (BBVA) has been working in Visa’s Tokenized Asset Platform (VTAP) sandbox this year, according to Visa’s announcement on Wednesday. What’s interesting is that this isn’t Visa’s first tokenization experiment—they’ve already teamed up with HSBC, Hang Seng Bank in Hong Kong, and the Central Bank of Brazil. From the looks of it, Visa is just dipping its toes in, and this is only the beginning.
This is also worth mentioning, “The bank was testing the issuance, transfer, and redemption of a bank token on a testnet blockchain. It seeks to launch an initial pilot with select customers in 2025 on the Ethereum blockchain.” Also, here’s a quote from Visa crypto head, Cuy Sheffield “We think that creates a significant opportunity for banks to issue their own fiat-backed tokens on blockchains, do it in a regulated way, and enable their customers to access and participate in these on-chain capital markets.”
The FTX News Is Annoying
The misinformation surrounding FTX creditor claims and the billions supposedly about to “flood back into the market” is beyond frustrating. First off, of the $16 billion returning to customers, $12 billion is in cash, meaning there's no guarantee it will go back into crypto. Second, FTX customers got seriously screwed, and it’s easy to imagine many of them wanting nothing to do with crypto ever again—can we really blame them? There's no celebrating the fact that “about 98% of FTX’s creditors are expected to receive around 118% of the amount of their allowed claims” when it fails to mention that the claim is indexed from asset prices at their absolute lowest point in November 2022. Creditors got screwed, plain and simple. Imagine getting $16,000 now for a Bitcoin you lost on FTX—it’s infuriating.
Ethereum ETFs Will Have Options… Eventually
It’s pretty straightforward: what Bitcoin gets, Ethereum gets. While there’s no telling exactly when options come for ETH, the next key dates for SEC decisions are November 10th for BlackRock’s Bitcoin ETF and November 11th for Bitwise’s Ethereum ETF, the Grayscale Ethereum Trust, and the Grayscale Ethereum Mini Trust. So far, Bitcoin and Ethereum are the only two cryptocurrencies allowed through the regulatory gates, though Ethereum’s ecosystem is still under heavy scrutiny. Solana will eventually make its way through as well, but this process will take time and largely hinges on the outcome of the upcoming election.
Ethena Is Launching A New Stablecoin
Ethena is set to launch a new stablecoin, UStb, in collaboration with Securitize, a leading real-world asset tokenization platform managing over $950 million in tokenized investments. Securitize works with major firms like BlackRock, Hamilton Lane, and KKR, and is responsible for BlackRock’s tokenized fund BUIDL. UStb will function like traditional stablecoins, with reserves invested in BUIDL on the Ethereum blockchain. This stablecoin will operate independently from Ethena's existing stablecoin, USDe, which launched in February and currently has a circulating supply of $2.6 billion.
According to analysis from The Block, UStb could offer support to USDe during difficult market conditions. “UStb can help USDe weather difficult market conditions, according to the statement. ‘If deemed necessary and appropriate by Ethena’s governance, during periods of negative funding rates, Ethena will be able to close the hedging positions underlying USDe and re-allocate its backing assets to UStb to further ameliorate related risks,’” the team explained.
Currently, the tokenized government securities market totals over $2 billion—a significant first step, but still a small fraction of the broader financial market.
Stand With Crypto Reassess Kamala Harris
Feel free to disagree, but Kamala Harris's stance on crypto isn’t really open for interpretation, i.e. the ‘Not Enough Information’ category. As Vice President for almost four years, she has been part of an administration that has openly targeted the crypto space. The evidence of these actions is clear, and a recent long-form write-up by Nic Carter details just one of the administration's coordinated efforts against the industry—a campaign in which she played a significant role by association. As a side note, Nic Carter’s writeup, “Inside the Biden Admin’s Plot to Destroy Silvergate and Debank Crypto for Good,” is incredible—definitely worth a read if you have the time. What I’m trying to say is that it's overly generous to label Kamala Harris as pro-crypto or even neutral. Wishing something to be true doesn’t make it reality, but perhaps Coinbase is hoping that by villainizing her less, they can protect themselves more. Can’t really blame them for that, we all want the same outcome—favorable and fair treatment.
Massive Bull Run Could Be Closer Than You Think!
Matt Hougan, the CIO of Bitwise, is joining me today to discuss whether or not Bitcoin shows the signs of a bull run and what to expect from crypto in the nearest future.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.