The dog days of summer have come and gone…. Indeed, the crypto market acts like a tired dog, unwilling to move from under its tree.
If I may indulge in this metaphor a bit longer… just be patient, the autumn rains will come. Fresh liquidity will pour in!
There is a lot of fear in the crypto market, even though the BTC price is still close to all-time highs. The stock market has recovered from its early August scare, which also dealt a huge blow to crypto.
It was the so-called Yen carry trade that rocked the market. A scare, but in hindsight not much more than a blip. The fear was bought, and we’re back in the range.
So we’re in an extremely long consolidation phase. I drew an arrow on the right of this chart, suggesting a breakout sometime in autumn – the exact timing obviously can’t be predicted.
Why do I think we will break out to the upside? Here are a few macro factors that I consider tailwinds.
- Rate cuts are coming in a little over two weeks. Historically, markets rally after a cutting cycle begins, provided that there is no recession. Currently, the American economy is looking good and financial conditions are easing quickly now, which is good news for the outlook of the economy.
- The US elections are just two months away. We could get a pro-crypto president in November (Trump). This remains to be seen of course.
- FTX is expected to redistribute $16B in cash to crypto-native degens sometime in Q4. In the meantime, the recent supply overhangs (Germany, Mt Gox) have been dealt with.
- On top of that, there are rumors that China might unban crypto soon. Russia is turning pro-crypto with international crypto payments.
- The dxy (dollar index) seems to be breaking to the downside, historically kicking off a rally for risk assets like BTC (see chart below from Jamie Coutts).
- Gold is at all-time highs, the S&P500 is flirting with ath’s. No reason why crypto wouldn’t follow suit.
Ethereum
It has been painful for ETH holders (most of us) watching Ether underperform Bitcoin on the one side and Solana on the other. A reason Ether price action is lackluster seems to be – paradoxically – the success of its Layer 2 roadmap. Rollups now account for more than 85% of daily transactions in the Ethereum ecosystem, roughly six times more than Ethereum main net. This has implications for demand for Ether: it lowers demand.
Why? Ethereum Layer 2s are like the byways that alleviate pressure from the Ethereum highway. On these byways, users don’t have to pay such high fees. But this means that Ethereum the highway sees less traffic.
But there are also reasons for optimism and they have to do with network effects. Ethereum is the oldest, most successful smart contract platform to date. It has a strong community. The community of developers is smart, large and dedicated. No competitor will knock that network effect over.
Also, ETH holders can draw inspiration from the historical charts. Here’s the ETH/BTC chart since 2016.
As you can see, ETH is still in the post-bull market downtrend versus BTC, the same as in 2018/19. Interestingly, ETH back then started rallying versus BTC not long after the FED initiated a cycle of cutting rates, starting on July 31, 2019. With rate cuts around the corner, this should give ETH bulls hope.
If you are patient, the markets will come to you eventually. Just hang in there. Stay in the markets with an open mind, shake off the fear and sadness. Every day there is an opportunity in the markets. Focus on a niche that suits you and/or look at sectors that are oversold amidst these bearish vibes.
🦧 APEX: #1 ON CHAIN TRADING 👉 GET STARTED NOW
💰 BINANCE: BEST EXCHANGE FOR BUYING CRYPTO IN THE WORLD 👉 10% OFF FEES & $600 BONUS
🚀 BYBIT: #1 EXCHANGE FOR TRADING 👉 GET EXCLUSIVE FEE DISCOUNTS & BONUSES
🔒 BEST CRYPTO WALLET TO KEEP YOUR ASSETS SAFE 👉 BUY LEDGER WALLET HERE
1️⃣ COINLEDGER: #1 CRYPTO TAX SOFTWARE 👉 IF YOU OWN OR TRADE CRYPTO YOU NEED THIS
TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.
You can find a full disclosure of all my crypto & venture investments here.
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
