Macro indicators, political interest boost Bitcoin

Hola folks!

Happy Monday. It has been a good start to the week, with cryptos gaining over the weekend, reacting positively to the Fed’s rate cut decision. 

The US Fed announced a 50 basis point rate cut on September 18 and the Bank of Japan left the interest rate unchanged, leading to heightened trading activity in crypto. Still, new highs elude the cryptos as financial assets and gold trade at new all-time highs. But, if Bitcoin manages to close above $65,000, crypto enthusiasts believe a bull run is on the cards. 

Today’s newsletter discusses the impact of the Fed’s rate cut on the cryptos and what crypto traders and investors can expect in the coming few days. 

Bitcoin kicked off the last week of September with a push to one-month highs, spiking to $64,700 after the weekly close. Traders are now eyeing $65,000 as the next key resistance level. The price action has been battling the 200-day moving average at $63,925 for the past five days, a level that rejected Bitcoin twice in August. A daily close above $64,000 would give bulls more confidence, while a close above $65,000 could break the lower-high pattern, turning Bitcoin’s outlook very bullish. 

Meanwhile, Bitcoin ETFs saw significant inflows, with $397.2 million added last week, signaling strong institutional interest. It’s also worth noting that Bitcoin ETFs bought 6,573 BTC, while miners only produced 3,150 BTC—an imbalance hinting at supply pressure. Yet, Bitcoin remains 13.6% below its all-time high, even as traditional markets like gold, the S&P 500, and the Dow Jones hit record levels.

On the regulatory and political front, the upcoming US elections are making waves in the crypto space. Donald Trump has pivoted his stance on Bitcoin, now proposing a “strategic national Bitcoin stockpile” akin to the US gold reserves, and even launched a new crypto business, World Liberty Financial. This marks a sharp turnaround from his earlier dismissive remarks on Bitcoin. Meanwhile, Kamala Harris, the Democratic candidate, mentioned her support for emerging technologies like digital assets for the first time, stirring excitement among crypto enthusiasts. 

With crypto now firmly in the political spotlight, alongside favorable macroeconomic conditions, Q4 2024 is shaping up to be a pivotal period for the markets, with bullish sentiment building. MicroStrategy’s recent $489 million investment in Bitcoin brings its total holdings to over 252K BTC, further reinforcing a positive outlook.

The altcoin market is also booming, supported by the Fed’s 0.5% interest rate cut last Wednesday and the Bank of Japan keeping rates unchanged. Ethereum, after weeks of underperformance, finally gained ground following the lowest point in the ETH/BTC ratio in over 3.5 years. 

Despite market speculation around Ethereum’s inflationary supply, it remains less inflationary than Bitcoin, suggesting that if BTC rallies, ETH could follow. 

BlackRock announced plans for a $30 billion AI-focused fund with Microsoft, which has fueled excitement in AI-focused crypto coins like BitTensor, FET, and Near Protocol, all showing strong weekly gains. 

In other news, Solana Labs announced its second crypto phone, “Seeker,” will launch in 2025.

• BTC $63,547 ⏫ 8.46%

• ETH $2,647 ⏫ 15.24%  

• TAO $549.82 ⏫ 84.31%

• FET $1.69 ⏫ 28.42% 

(All data here is as of 3.55 p.m., 23 September 2024)

Before we conclude, here’s a quick look at some important news from around the crypto world.

• BlackRock and Microsoft plan to launch a $30b fund to invest in AI infrastructure, including data centers and energy projects. AI models, especially for deep learning, need great computational power, driving demand for energy and specialized data centers with thousands of interconnected chips. This brings renewed attention to AI-focused crypto tokens. Read more here. 

• Ethereum developers agreed on Sept. 18 to split their upcoming hard fork, Pectra, into two packages, in a move to make the massive upgrade less unwieldy and reduce the risk of missteps or bugs. Read more here.

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

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