Monthly Crypto Alpha Report – November 2023
It’s over… we’re so back… it’s over…
But really, we’re so back!
If a chart were a painting, then the BTC chart could make a grown man weep. And no, we’re not in a raging bull market. But it appears we’ve just left the indifference/depression stage of the market cycle.
The BTC chart has given us official permission to be hopeful (of course, we had never lost hope to begin with).
Let’s have a look at last month’s developments.
The ‘Coin Telegraph intern’ that pumped the price based on a rumor of a Blackrock spot BTC ETF approval may ironically have kicked off the new phase of the bull market… This initial pump of October 16 got rejected, as the rumor turned out to be false.
But the mood had noticeably changed. Traders and investors suddenly seemed to have been given the price action playbook for an actual BTC spot ETF approval, which is likely imminent.
Finally, a week later, on October 23, BTC broke out of the price range it had been trapped in for more than half a year. In no time the price shot up and briefly exceeded 35k.
The BTC breakout also marked a clear decoupling from the stock market. A temporary phenomenon? We’ll have to see. But it is a significant move from BTC (blue) compared to the Nasdaq (orange, ironically, in below chart.)
What explained the frenzy around a potential Bitcoin ETF approval?
Well, the ticker symbol for the Blackrock ETF and a CUSIP number had been registered – and this didn’t go unnoted. It made onlookers wonder: why would these symbols have been registered if an ETF is not around the corner?
Bloomberg estimates the chance a spot ETF will be approved at 90%. An important deadline to watch is January 10, 2024: the SEC will have to either accept or reject ARK’s Bitcoin ETF. The Blackrock deadline is in March, but many expect the January deadline is more relevant.
Why? Because it would not make a lot of sense to reject one ETF while accepting others (compare this to the Ethereum Futures ETFs, a boatload of which were all accepted at the same date).
So, what will change after the Bitcoin spot ETF?
For one, financial advisors will be able to offer BTC to their clients, for example in IRAs. In other words, a BTC spot ETF will be the ‘money lego piece’ that is currently missing for broad adoption in the machinery of traditional finance.
That doesn’t mean that wide scale adoption will happen immediately, though.
Let’s compare it to the gold price before and after the first United States gold ETF was approved, in November 2004.
If you look carefully at the multi-year GOLD chart, you’ll notice that there seemed to have been a ‘buy the rumor, sell the news’ effect of the gold ETF launch. It took almost a year after the ETF before the gold price broke its previous all-time high. But when it did, it was off to the races.
The gold price pumped more than 300% in the subsequent 6 years. That’s a lot for a slow-moving asset like gold.
It’s great to see BTC break the price range it had been trapped in for a while.
Historically, a break of this 32k level has seen moves to 48k. Still, keep in mind we’re not in raging bull market territory. Volumes are still rather low, there aren’t tons of newcomers in the market.
There are wars raging, both real wars and anti-crypto wars. But there are some certainties too: the halving isn’t far away, and the US money printer will go brrr again!
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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.
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