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GM friends.
Hereâs what Iâll cover today:
đWhere does BTC go from here?
đ Crypto chart of the week
đď¸ The latest DeFi news
đWhere does BTC go from here?
The past few days have been quite eventful, to say the least.
With that in mind, in this issue I wanted to share a few market thoughts and what I expect to happen next.
Two days ago, the U.S. Senate failed to advance the CLARITY Act, one of the most important pieces of crypto legislation in the U.S.
Then yesterday, the US FED Chair also announced a 25 bps rate hike, which was supposed to be bearish but didnât negatively impact crypto prices at all, as we have actually seen a small market pump in the past 24 hours.
Whatâs particularly interesting is the strength that the market is now showing.
Stocks dipped after the Fed decision, weâve had plenty of bearish crypto news recently, and yet BTC and most altcoins have gone up over the past 24 hours.
BTC also didnât break below the ~$75,500 support level for a sustained period despite testing it multiple times, which is also notable.
In my opinion, all of these things support the bull thesis that the latest BTC rally from $65k to $82k isnât just a bull trap and that it might be the beginning of a new bull cycle, with the cycle bottom likely behind us.
These are a few of the main reasons why I shifted my view from a Q4 bottom to the cycle bottom already being in for BTC:
Massive sudden rallies like BTCâs recent move from $65k to $82k have historically happened only after the bottom was already in. In the last bear market, there were plenty of bull traps, but most were slow grind-ups. BTC only started having explosive rallies once the cycle bottom was in.
Trump has a strong incentive to avoid actions that could lead to a new market crash over the next 2 months. The midterm elections in the US are on November 3, and Democrats are currently ahead in national polling. So I think Trump will try to avoid escalating global conflicts or making other risky moves that could hurt markets and further weaken Republicans before the election takes place.
BTC is now trading above its 200-day and 200-week exponential moving averages (EMAs), signaling that the uptrend has resumed. My only concern is that BTC has recently dipped below its 50-week EMA, which I also consider an important indicator, but that also happened plenty of times in 2023.
The Q4 bottom view has become consensus in the past few months (I first talked about it in Q1 this year), and when all the market participants are waiting to buy at the same time, things often donât go as planned, and BTC frontruns them.
In addition, BTCâs recent strength also makes me think the $65k â $82k move wasnât just a fake pump. But thereâs an important distinction here: I think the cycle bottom may be in. Whether the local bottom is in or not, I am not sure at all.
As I shared in a recent post on X, September is historically BTCâs worst month in terms of performance, and if you look at what happened before, BTC repeatedly tested its 200-day EMA and/or its 200-week EMA after its cycle bottoms.
Right now BTCâs 200-day EMA is at $73k and its 200-week EMA is at $68.8k, although as time passes, the 200-week EMA will keep rising if BTC doesnât suddenly crash.
Considering this, I think a scenario where BTC goes to $71k-$72k before resuming the uptrend and hitting new local highs is also possible. But for me, as long as BTC doesnât drop below its 200-week EMA, the bullish thesis remains intact.
In any case, I am not sitting on the sidelines waiting for $72k. I also think itâs possible we go straight to $82k and beyond from here.
I am already heavily allocated to the market, as I think the risk/reward is already very compelling here, with the downside being limited in my opinion.
BTC is by far my biggest holding, although I plan to increase my altcoin exposure over time. But ideally, I want to see BTC break above $82k on strong volume and make its first higher high before rotating my BTC exposure into altcoins, since I think that would be the perfect final confirmation that a new bull cycle has begun.
And thatâs basically my current market view.
My advice to you is to listen to arguments from both bulls and bears and build your own thesis based on what you believe is most likely to happen.
No one has a crystal ball to know exactly what the market will do next, but the goal is to just take trades where the odds are in your favor.
If you ask me, I am personally bullish here.
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Chart of the week
Uniswap v4âs trading volume hit a new ATH
Crypto meme of the weekđ
The latest developments in DeFi
Circle launched its own L1 called Arc
SEC allowed trading tokenized stocks on-chain in the US
Aave introduced a new RWA Hub on Avalanche that will allow institutions to borrow against RWAs
Stacks launched a 3-month BTCfi campaign with 3 BTC in total rewards. You can participate by using DeFi apps Zest Protocol & Bitflow
Robinhood announced plans to enable voting rights for its tokenized stocks
Deriveâs proposal to launch Derive v3, its biggest exchange upgrade yet, went live
Extended announced it is migrating to Arc blockchain
Morpho launched Direct Lending against the collateral assets of your choice
Kinetiq started burning all the KNTQ tokens it buys back
World, a Solana-native prediction market platform, went live
Zama Confidential Swap Protocol went live, enabling private swaps on Ethereum. On top of that, Zama also launched a new set of confidential Morpho vaults
US Clarity Act failed to pass. All democrats in the US Senate voted against it
Krakenâs parent company announced plans to bring Hyperliquid perps to the US
Balancer is shutting down. A proposal to distribute its treasury to BAL holders is live
Thatâs all for this week!
Until next time,
The DeFi Investor
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