Rational Active Allocation

We hope this message finds you well and you are all enjoying Bitcoin’s current rally. As of now, Bitcoin is valued at ~$67500. Over the past week, it has seen a significant increase in value, which may be of interest to those who hold it and other crypto assets.

If you are wondering why the other crypto assets are also not on the rise, its worth highlighting the Bitcoin dominance indicator.

Bitcoin's dominance has risen by more than 2.5 percent in October and this trend has had a notable impact on altcoins. Many speculators are opting to allocate their resources towards Bitcoin rather than exploring other options at present. This development has sparked discussion regarding the potential slowdown of this trend and the emergence of an altcoin season.

We are current 100% long Bitcoin, and see no reason to adjust our allocation in the near term. Our long term bullish case for Bitcoin is still unchanged.

$BTC

Earlier in September we highlighted the importance of liquidity and the impacts it has on the Bitcoin price. If you missed it, you can catch up on the charts and our blog: Liquidity is everything:

https://www.momentum-analytics.io/news/liquidity-is-everything

The Federal Reserve has started cutting rates again to help lower borrowing costs. This could impact the stock market - the S&P 500 tends to go down by about 4% in the first six months after the first rate cut if we're in a recession, but can go up by about 14% (on average) if we're not. Economists (the talking heads) don't think we're in a recession right now, but there are some signs it could be coming. We'll have to wait and see, but this can be seen as a tailwind for Bitcoin if we are in fact not experiencing a recessionary rate cut. Further to this, its worth highlighting the recent news about China unleashing a stimulus package to boost their economic growth. The measures include cuts to the benchmark interest rate, with more fiscal measures expected to be announced soon. “Yet another tailwind for Bitcoin” Let's keep an eye on how these developments unfold, but good news for the Bitcoin world! We have adjusted our allocation, but remain cautious, as always our our long term bullish case for Bitcoin is unchanged. $BTC $USDT $USDC

Starting with $BTC ETF news, the first trading day of July saw a significant $130 million ETF inflow, marking the highest inflow since the beginning of June. In contrast, last month experienced consistent substantial outflows.

The first half of 2024 witnessed a surge in enthusiasm for crypto assets, leading to an all-time high for Bitcoin. However, due to price headwinds and the policy environment, volatility has decreased, impacting Bitcoin's performance. Long-term holders have started selling again, while a supply overhang continues to exert pressure on the market (possibility of selling from Mt. Gox depositors and Germany's Federal Police Office). In addition to this, the recent increase in selling by Long-Term Holders of Bitcoin, despite fewer miner sell-offs, indicates market instability and a vulnerable outlook in the short term.

The Fed's preferred inflation measure remained unchanged in May, slightly above the two percent target. Considering the weak GDP and declining consumer confidence, there are hopes for a rate cut in September. We remain cautious and are waiting in cash, however our long term bullish case for Bitcoin is unchanged.

During moments of uncertainty in markets, it is natural to feel stressed about your investments. However, it is important to take a step back and reflect on the long-term fundamentals of your particular investment thesis. From an economic perspective, it is crucial to understand the supply and demand dynamics that drive market movements.

Focusing on these fundamentals, you can better navigate through volatile market conditions and make informed investment decisions and remember, staying informed and focused on long-term goals can help you weather the storms of market uncertainty.

With all this said, let us have a look at current $BTC supply and demand and the impact the halving has had in the past and will have in the future.

Read full article here

The last few weeks have ushered in some volatility in the $BTC market. Markets unfortunately don’t go up in predictable straight lines. Bitcoin is no exception, and although the long term trajectory looks very promising, the retraces are often violent.

After the July 2016 halving, from the beginning of 2017, the bull market had six retraces of more than 30% and a seventh of 24% near the eventual cycle top. See our original blog post with chart here

From the chart, think about where we may be today?

We are paid to be patient, an entry will present itself and from history this asset gives you opportunities. There is always an urge to allocate to the next latest and greatest “mouse trap” (read crypto alt-coins), but remember every cycle creates a new narrative with even more elaborate promises.

“That men do not learn very much from the lessons of history is the most important of all the lessons of history.” – Aldous Huxley