Just my quick take on the market straight from our ADIG Discord.
As a reminder, it's a good idea to make sure you're sufficiently allocated into risky SPOT positions early. So if memecoins and select alts are your bet, make sure you've been DCA'ing on dips. Because when the actual run-up in price occurs, it's already a bit too late to start rotating capital.
I bring this up because I've been noticing a trend, and I've spoken about it before but here's some alpha:
It would appear that less and less people are interested in buying spot BTC at these current levels. BTC’s range-bound PA and on-chain analytics prove this as fact, regardless of what the talking heads on CNBC or Twitter Influenzas sell us.
All the crypto-natives and smart money were buying BTC at pre-ETF levels circa $20k-$38k levels. Noobs/retail/short-term holders, w/e you want to call them, stepped in from mid $50k zone to a majority concentration around the $62k-$63k zone. This is why ~$56.5k seems to be equilibrium for BTC lately, and why it always ranges back to that level. My assessment is that we don't have a whole lot of ranging left for BTC, and after October 17th, the final eclipse pair transpires, and bullish energy begins to return to markets. That being said, with the little interest in BTC at current levels, we're going to see a LOT of crypto-native, and soon smart money FLOOD (certain) altcoins and memecoins.
We've already seen this happen with Sui. Actually, as of today, Sui is officially beyond all time highs, and in price discovery mode. So bullish, congrats to those that got in. Now, I fully expect this same phenomena to happen with memecoins first, and very particular altcoins (like maybe TAO, although I'm not a fan of it). So, hopefully you guys have been accumulating risk-on coins when I've been talking about them for months, but if you haven't you should definitely get exposure now. It's not a great place to really unload the family farm, but you should get some exposure just in case we chopsolidate here for a bit, while we wait for volume/liquidity to return in this latter half of October.
I remain net-short until BTC breaks out of $65k on high time frames, but I'm starting to feel like, at least at the moment, that markets are going to remain irrational, leading into the election, barring any "black swans" such as BOJ rate raise, WW3, etc.
I believe the USGov, and current admin are doing everything they can to prevent any kind of financial market or economic collapse, and will save that for when Trump gets elected. Everyone thinks we're going to explode into the stratosphere post-election, and we probably will. But I have a strange hunch / feeling that maybe it won't be as explosive as we're expecting, and that perhaps the main "bull market" doesn't truly begin until late Q1 of 2025, or maybe even Q2. Either that, or we have an incredibly explosive rally starting Oct. 17th, touching 6-fig BTC, and then things unwind catastrophically pushing us back into bear-market territory by ~March of 2025.
As a reminder for all the bulls / moonboys out there, here are some bearish macro headwinds risk-assets (crypto) still have to contend with (as a reminder this doesn’t mean that you should not be allocating, you should be allocating to spot regardless):
Bank of Japan still needs to raise rates whether you like it or not. The only tool they have to combat inflation is by raising rates. It’s a matter of when, not if. And when it happens, risk assets such as Crypto will be the first to get unwound, and immediately repatriated as risk of margin calls increase. As a gentle reminder, there are still at least a trillion (USD) worth of assets within the US equity market and Crypto that are exposed to this Yen Carry Trade. You can do the math on this one and tell me it’s not a massive bearish overhang.
Sahm Indicator and recessionary fears have not subsided. The US is clearly an economy in decline, and unable to work ourselves out of debt. If / when markets start to realize this and price it in, risk assets will take a hit. Now the counterpoint to this, which is something I’ve been adamant about, is that our Gov will just continue to print fiat, and further inject liquidity into the economy, which will eventually find its way into risk assets (crypto / stocks). So less of an issue, but still not great as there’s currently less money to go around and your favorite memecoin, or altcoin off page 56 of Coinmarketcap.
Geopolitical Risk - You guys already know that tensions in the Middle East are red-hot. Troops from all sides (to include the US) have been killed, and all entities from all sides are getting involved. Although the Middle East seems to be a revolving door for neverending conflict, this time seems a bit different. I’m not saying we’ll have nuclear conflict or WW3, but markets will price this kind of news in unfavorably, and the first things to get sold off are risk assets / crypto.
Outflows / Unlocks / Supply Overhang - Mt. Gox Distro’s as I predicted before when nobody believed me are still not done. Something like at least $4.4 Billion BTC yet to be distributed. Doesn’t matter whether you think it’ll be sold or not, people will definitely realize some gains at current price point, and market participants will price this in as bearish. The US Gov also got permission to sell another 70k BTC or some insane figure, the amount is irrelevant, as the point is that no one wants to be long BTC when the US Gov and Gox creditors are selling. I expect the worst of this to be over by the end of October.
There are other macro factors bearing down on Crypto, it’ll be an uphill battle, but this from a macro standpoint is the best time to be moderately adding to risk. Nothing in Crypto will get truly crazy until BTC breaks above at least $65k on high-time frames, but real bull market doesn’t start until BTC closes above previous all time highs on the daily.
That's my current thinking as of now, happy to hear other people’s thoughts, questions.
As a reminder, we’ll be migrating much of our day-to-day analysis, research, etc. for ADIG members. So if you want alpha and you want it more often, then feel free to check out ADIG. We publish daily updates, analysis, research papers, trades, etc. in the group. The goal is to build the ultimate community of contributors who want to separate signal from noise, and help each other grow their crypto wealth, and escape the legacy financial system.
As always, stay relentless.
- PJ