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In our most recent communication, we were eagerly awaiting the Fed’s decision on U.S. interest rates. The Federal Reserve has finally reduced interest rates by 50 basis points, initiating a cycle of monetary easing for the first time in four years. This decision comes as inflation slows down, reaching 2.5% in August. Analysts believe that this cut could strengthen the value of Bitcoin and other safe-haven assets like gold. This more accommodative policy could support the growth of risky assets in the coming months. Indeed, over the past seven days, Bitcoin has increased substantially in value.
However, the crypto asset is still encountering strong resistance around $64,000–$65,000. Yet, catalysts finally seem to be emerging that could give Bitcoin the necessary momentum to truly return us to a bullish market after months of consolidation. The price of Bitcoin could soon reach $70,000, supported by a favorable macroeconomic environment, notably thanks to monetary easing measures by the central banks of the United States and China. The People’s Bank of China recently reduced banks’ reserve requirement ratios, releasing one trillion yuan to stimulate lending, and injected 500 billion yuan to invest in stock markets. This wave of global easing could attract capital to risky assets, including Bitcoin, strengthening its short-term growth potential.
Moreover, the approval of options on Bitcoin ETFs by the SEC in the United States has generated great interest. These options will allow investors to speculate on the price of Bitcoin or hedge against market fluctuations. While some analysts believe this could reduce volatility by offering more flexibility to investors, others anticipate strong upward volatility. Bitcoin’s fixed supply, combined with new derivative products, could potentially create an amplifying effect on the asset’s price, according to some experts. The Bitcoin options market shows signs of “reflexivity,” where traders’ expectations influence prices, creating an upward cycle. Nick Forster, founder of Derive, points out that option contracts indicate traders are betting on high volatility, targeting prices between $80,000 and $90,000 by the end of November. The recent approval of options on BlackRock’s Bitcoin ETF could also play a role in future market trends.
The growing correlation between cryptocurrencies and U.S. stocks, notably the S&P 500, highlights a market synchronization influenced by macroeconomic policies. After the Federal Reserve’s interest rate cut, this relationship reached a coefficient of 0.67, close to the record level observed in mid-2022. This means that the movements of cryptos like Bitcoin closely follow those of risky assets such as stocks. This convergence results from more accommodative monetary policies by central banks, facilitating access to liquidity and supporting financial markets. Experts like David Lawant of FalconX predict that this correlation will remain high as the U.S. economy stabilizes. In the case of a “soft landing” of the economy—a situation where growth is maintained without high inflation—cryptocurrencies could benefit from favorable conditions. Furthermore, with the anticipated approval of new Bitcoin ETFs and a more positive crypto stance in the electoral campaign, these digital assets could enjoy long-term bullish momentum, reinforced by increased participation from institutional investors.
Investors injected $321 million into digital asset funds last week, mainly into Bitcoin ETFs, following the Federal Reserve’s interest rate cut. Bitcoin attracted $284 million, showing renewed interest in risky assets in a low-interest-rate environment. However, Ethereum continued to see capital outflows, with a withdrawal of $29 million due to redemptions after the conversion of the Grayscale Ethereum Trust into an ETF. Solana remains popular, especially outside the United States, with regular inflows.
Caroline Ellison, former CEO of Alameda Research, was sentenced to two years in prison for defrauding investors of FTX and its associated company. Judge Lewis Kaplan of the federal court in New York highlighted her exceptional cooperation as a witness against Sam Bankman-Fried, the former head of FTX sentenced to 25 years in prison. In addition to her sentence, Ellison must return $11 billion, the same amount demanded of Bankman-Fried. Before the verdict, Ellison expressed deep remorse, stating that she thinks every day about the people she has harmed. Although she faced up to 110 years in prison for various charges of fraud and money laundering, her cooperation with authorities earned her a reduced sentence. Her lawyers had recommended supervised release without incarceration, but the judge ultimately decided on a shorter prison term.
Riot Platforms and Bitfarms have reached an agreement after several months of battling over a hostile takeover. Riot, which now holds 20% of Bitfarms’ shares, succeeded in appointing one of its candidates, Amy Freedman, to Bitfarms’ board of directors. Although Riot has not yet finalized the complete acquisition, the agreement allows Riot to purchase more shares if its stake remains above 15%. Meanwhile, Bitfarms has sought to strengthen its position by acquiring Stronghold Digital Mining to counter an acquisition.
Bitcoins mined in 2009, just after the creation of the Bitcoin network, were recently moved for the first time in 15 years. These 250 BTC, worth about $16 million, came from blocks mined in January 2009, at the very beginning of the network. These transactions immediately drew attention, with some speculating about the return of Satoshi Nakamoto, Bitcoin’s anonymous creator. However, analyses have shown that these movements do not appear to be linked to blocks traditionally attributed to Satoshi. It is likely that the holder of these old Bitcoins moved their funds for security reasons. This could be a response to a recent leak of private keys from some users of Bitcoin Core wallets, revealed by analyst ZachXBT. Such movements, although rare, remind us of how valuable early Bitcoins have become over time, as miner rewards have drastically decreased due to “halving” events.
MicroStrategy has purchased 7,420 Bitcoin for $458.2 million, bringing its total reserves to 252,220 BTC, currently worth nearly $16 billion. This acquisition comes shortly after a purchase of 18,300 BTC made the previous week. The company, led by Michael Saylor, continues to strengthen its position as the largest corporate holder of Bitcoin assets. MicroStrategy often finances these purchases through a combination of debt and internal funds, highlighting its long-term strategy focused on Bitcoin as a store of value.
According to BlackRock, Bitcoin is increasingly perceived by its clients as a hedge against a U.S. debt crisis, rather than a purely risky asset. Its distinctive characteristics, such as its limited supply, global nature, and ease of transfer, make it an alternative to traditional monetary reserves amid growing concerns about the U.S. federal debt. These concerns partly explain the increased interest of institutional investors in Bitcoin as a potential reserve asset. However, although Bitcoin has historically been considered a “non-correlated” asset, it has shown a strong correlation with stocks since 2020, notably with tech stocks. BlackRock attributes this behavior to Bitcoin’s immaturity as an asset, while highlighting its “strong liquidity” during panic periods, unlike less liquid assets like real estate. Despite this, Bitcoin is still considered risky, especially in the face of regulatory changes and its status as an emerging technology.
In September, Bitcoin defied usual expectations by rising 22% from its monthly low of $52,500, despite its reputation as a bearish month. The market is closely watching the $65,200 threshold, a key level that could trigger a break in the ongoing bearish trend. Since its historical peak in March, Bitcoin has moved within a prolonged downward channel, creating a sense of anticipation among investors. This behavior is reminiscent of similar periods of consolidation in the past, where Bitcoin took months before making significant moves. These prolonged periods of consolidation, although tedious for some, are common in Bitcoin’s evolution. Currently, Bitcoin has spent 126 days in a price range between $59,700 and $65,670. Such consolidation could last until October if past trends repeat. However, when a breakout occurs after these stabilization cycles, it is often followed by major movements. Meanwhile, the low decreases in volatility this year, compared to previous cycles, reinforce the asset’s stability and make it more attractive to institutional investors.
As the fourth quarter of 2024 approaches, analysts anticipate continued growth for Bitcoin and cryptocurrencies, notably due to institutional adoption and favorable macroeconomic conditions. Ryan Lee, an analyst at Bitget, estimates that Bitcoin could be between $58,000 and $72,000 in October, emphasizing that signs such as negative funding rates on Bitcoin futures and a high fear index are often precursors to significant rebounds. The massive purchase of Bitcoin by institutional players like MicroStrategy reinforces this dynamic. Moreover, the regulatory landscape could change after the U.S. presidential election in November, which could favor innovation in the crypto sector. Gabriel Selby, an analyst at CF Benchmarks, sees these conditions as an opportunity to strengthen investor confidence. Additionally, Ethereum could benefit from the rise of scaling solutions and the tokenization of real-world assets, thus reinforcing its role in decentralized finance (DeFi). BlackRock, for example, has launched a tokenized money market fund on Ethereum, marking the beginning of integrating traditional assets into the DeFi world.
Following the recent interest rate cut by the Federal Reserve, the price of Bitcoin increased by nearly 8%, crossing a key threshold with the “supply in profit” indicator surpassing its 365-day moving average. This indicator measures the proportion of bitcoins in circulation purchased at a price lower than their current value. When this level is crossed, it can indicate upward potential, as a greater proportion of bitcoin holders are in profit, which tends to reduce selling pressure and strengthen market confidence. According to Julio Moreno of CryptoQuant, this event marks a crucial inflection point that could be followed by additional gains for Bitcoin. Historically, surpassing this moving average is often associated with periods of increase, as it indicates that the market has reached a certain level of psychological support.
The fund remains exposed 85% BTC and 15% SOL.
The presented information is as of September 25th, 2024, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
