Divine Investing

Post 1/3

We have not posted in a while, because as described in a post from the 13th of June we are still consolidating as far as $BTC goes. Back then we said that we are consolidating between $60k and $70k and funnily enough, we are still in this range. We have dipped below $60k for a while, but had quite a strong bounce back. The lack of posts is also due to this fact, honestly not much has fundamentally changed on the crypto market in the last 6 months and also activity in various groups that we are a part of and also on Twitter is quite low at the moment, but this things can change quite quickly in crypto.

There are multiple possible explanations as to why Bitcoin has dropped below $60k, one of them was the selling pressure from the country of Germany, which had over $3 billion worth of Bitcoin that was sold on the open market instead of OTC. The next reason could have been the distribution of the Bitcoins from the Mt. Gox exchange that went under in 2014 because of a hack. Most of the people that wanted to sell these Bitcoins have most likely sold them by now. Then there is one more reason - the uncertainty regarding the war in the Middle East. Generally, when there are major news regarding the region the price action becomes very volatile and we can see huge intraday swings. Having all of these in mind and especially the global liquidity (which we write about later on) we think that Bitcoin has had a good bounce back and showed its strength, all we need is a decisive break through the current all time high.

Post 2/3

After a long while we have decided to do a small rebalance, there is an unlock coming at the end of October for $TIA, which will double its market cap. There could be a short squeeze because of this fact, which might mean that the price will increase in the short-term, but due to the uncertainty we are removing it at least for the time being. It is up 15% today, that is why we feel it is a good time to replace it with $PENDLE, which carries $ETH, DeFi and RWA narratives, which also diversifies our portfolio further.

As far as the macro goes the current conditions seem quite favorable to us, which we can also observe in S&P 500 making new all time highs pretty much on a daily basis. There are several factors to consider. First one being is that the FED has had a 50 bps rate cut in September, signaling to the market that they believe they have tamed the inflation and they are planning further cuts in the coming months. The unemployment in the US is also at an acceptable level. There was much talk of a recession in the past few months, but almost none of the indicators are flashing any signs of recession at this time, it is more the media's way of getting clicks with fearmongering, because bad news generally attract more clicks/views/engagement.

Post 3/3

The second thing we should talk about is the global liquidity, which looks to be on the increase already. The leading country in this aspect is China, the Public Bank of China has announced huge aid to the stock market in the form of 500 billion RMB, with a possibility of 500 more, to which the market has responded very favorably.

The third thing are the elections in the US, this is in our eyes the primary reason as to why the crypto market has not moved to new all time high as SPX did. There is uncertainty regarding who will get elected, our current view is that if Trump wins it is good for crypto in general and if Harris wins it would be good for $BTC, but not so much for alts, what will actually happen remains to be seen. SEC has had a very aggressive and negative approach towards alts in the past couple of years, which is expected to change if Trump wins. Generally the election year is very positive for the markets and YTD the stock market has performed the best out of any year in the 21st century, unfortunately for us crypto has not been doing so hot so far.

We could say this is the longest consolidation (which is quite painful to go through in the bull market) we have ever had in a crypto bull market, normally they are much shorter at least as far as $BTC goes, the alts normally underperform in these periods. Our thesis still remains the same, we are still expecting a "blow-off" top, probably some time in the next year and our expectations are that the altcoins will outperform Bitcoin, that is why our portfolio is positioned in the way it is, we still primarily believe in $INJ, one of the examples why is because it has had higher revenue in Q3 than giants such as $BNB chain and $AVAX.

As long as we stay in this consolidation do not expect many updates from us, but we are constantly monitoring the market as you can see from this long post and we are ready to be more active as things start moving faster once again.

Post 1/2

After the dust has settled at least a little bit it's time for a new post. In the past week we've seen huge sell offs in the crypto and also in the stock markets.

The biggest Japanese stock index NIKKEI has seen the biggest two-day sell off since 1987, it has dropped over 12%, which is almost unbelievable for a stock index. This was due to the fact that the Japanese central bank increased interest rates, which have been close to 0 and sometimes even negative. 

This allowed investors to borrow money cheaply, convert Yen to USD and profit from the exchange rate, because the Yen was weakening and USD strengthening. Additionally investors could take these Dollars and invest them into the US stock market for example S&P 500. This is called the Yen carry trade.

Once the Japanese central bank increased the interest rates the Yen strengthened and investors that borrowed the Yen started to close the positions, which strengthened the Yen even further and consequentially the stock markets dropped.

Because the market is global, the reaction was also felt in crypto, $BTC dropped all the way to $50k, while altcoins had even worse losses, which is also reflected in our strategy. The cryptocurrency market as it stands is very uncertain. Altcoins have been bleeding since March/April, Bitcoin has been in $54k to $72k range since early March (with the latest exception which was rebought quickly) and in the meantime the US stock market has been performing very well, it was just at all time highs in the middle of July.

In our opinion this has been the hardest bull market to navigate (if we can even call it that so far) ever since we've entered the crypto market back in early 2017. We were positioned in a way that we were early in the market in the current bull run with the expectation of a proper altcoin bull run when the mass retail participants enter the market as it was in previous bull runs. Only time will tell if this will be the case.

Most altcoins are heavily beaten down, some are even at or below the levels of 2022 bear market, which is quite unbelievable to say. There are only a few overperformers that you can cherry pick such as for example $SOL and most investors would outperform the vast majority by just holding Bitcoin in the past 6 months for example. 

Continued in the next post.

Post 2/2

While it is impossible to predict the future, we expect that the FED will decrease the interest rates in the next FOMC meeting in September, the majority of market participants think so as well. That should have a positive effect on the stock market. There has been talks of recession in the past week and that the FED has been too aggressive, that they've made a mistake by not cutting the interest rates already in July and they will probably want to calm the market down.

We will see what happens, but the election years in the US have historically been very good for the stock market, there are talks of quantitative easing again, which would increase the amount of money supply as well. This does not necessarily mean that crypto will prosper too, we've seen it do the opposite in the last 6 months as described before, however we remain optimistic, historically speaking the past 6 months are more of an outlier rather than a rule.

If you are more risk averse, but still want to profit on potential crypto gains then our opinion is that just buying Bitcoin is not a bad idea (DCA every month). The BTC ETF has been a huge success, $ETH got its own ETF which adds validity to crypto and that it's definitely here to stay as a new asset class. As far as the altcoins go, the future is not as obvious as we believed and like we said earlier, only time will tell where we end up.

Like always, do not invest what you aren't prepared to lose fully, especially in crypto, because the market is very volatile. Nothing written above is a financial advice, but rather of an informative nature. Here's to better months ahead 🥂