🔎My current market view

weekly valuable insights

Aug 08, 2024

In today’s newsletter:

🔎My current market view. And why did the markets crash?

📊On-chain alpha

😂Crypto meme of the week

🗞️The latest DeFi news

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🔎My current market view

There was a lot of panic in the markets this week and for a good reason.

The US stock market volatility index hit the highest level since the COVID-19 crash, and crypto was also affected by the huge stock market crash.

What happened?

Well, there seem to be multiple reasons why the markets were crashing:

However, perhaps the biggest one is the latest move by the Bank of Japan.

The Bank of Japan increased its interest rates for the first time in many years. As borrowing Yen was very cheap for a long time, many wealthy people were borrowing Yen at a 0% interest rate and reinvesting it in other assets.

But when Japan raised interest rates, Yen borrowers had to quickly unwind their positions to repay their loans as borrowing Yen was suddenly not free anymore.

And to do that, they had to sell their assets, which led to a market crash.

What’s next for markets?

After observing the market's reaction to the interest rate hike, the Bank of Japan announced no further rate increases are planned for the near future.

This is one of the things that led to the quick recent market recovery.

In the short-term though, what’s going to happen is unclear.

Here’s why I say this:

Potential war escalation - Iran might (or might not) attack Israel, which could cause a lot of panic in the markets
Kamala’s odds of becoming the next U.S. president are rising according to prediction markets - And she still hasn’t announced her crypto stance
Berkshire Hathaway, the company of the legendary investor Warren Buffet, now holds a record $277b in cash after selling lots of stocks (does he know something?)

But on the good side, there’s a high chance that the FED will cut rates at the next FOMC meeting. And on top of this, the next US presidential elections are now less than 100 days away.

Why is this such a big deal?

Right now a lot of people are concerned that a recession is inevitable.

But I’m pretty sure that in order to have a chance to win the US presidential elections, democrats will do everything in their power to postpone it as much as possible.

Yes, there might be a recession at some point in the future. But I’m sure that this will happen a while after the US elections. If printing money will be needed to postpone the recession, the current presidential administration will likely be willing to do that.

This makes me think that Q4 will be a great quarter for financial markets.

While I don’t know what will happen in the short term, I remain bullish on crypto in the mid-long term.

I’ve been buying more crypto over the past few weeks and I plan to continue doing this over the next weeks if the market dips further.

If my thesis is correct, BTC will be back at all-time highs in Q4.

Cheers🥂

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