The objective of this letter on the 0.5 % Fed interest rate cut is to inform you about the current state of the crypto-asset market as well as recent news in this field. This letter is not investment advice, but merely a sharing of my personal point of view.
News
Bitcoin ETFs have the fastest institutional adoption in ETF history, according to Bitwise CIO. Matt Hougan, CIO of Bitwise, which manages the BITB ETF, stated on the social network X that «investment advisors are adopting Bitcoin ETFs faster than any other new ETF in history.».
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Switzerland: One of the country's largest banks now allows its clients to invest in Bitcoin (BTC) and Ethereum (ETH). The Zürcher Kantonalbank (ZKB), the 4th largest Swiss bank, has been interested in the blockchain industry for several years. So much so that it has moved into the era of cryptocurrencies: its clients will now be able to go through it to acquire Bitcoin (BTC) and Ether (ETH).
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«A serious slip in public finances» – Bruno Le Maire warns about France's financial situation. France was already in a very bad position in terms of public deficit, and this could worsen in 2025. This is the message sent by resigning Finance Minister Bruno Le Maire, thus warning the future government. What is the situation?
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18 % of French people own cryptocurrencies, and 30 % have owned them at some point, according to a Gemini study. According to a recent study by the cryptocurrency exchange platform Gemini, 18 % of French people currently own cryptocurrencies, while 30 % have owned them in the past. These figures show a growing adoption of digital assets in France, despite market fluctuations and debates surrounding their regulation.
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$1.46 trillion: Stablecoin volume on Ethereum (ETH) explodes. The year of the stablecoins? The volume of «stable» cryptocurrencies based on other assets is rising steadily. It has doubled since 2023, particularly on Ethereum (ETH). A closer look at the reasons for this breakthrough.
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The giant PayPal now integrates Ethereum Name Service (ENS) addresses. Payment giant PayPal has just integrated the ability for its US customers to send cryptos through the Ethereum Name Service (ENS) system. What does this mean?
Fundamental Analysis
Source : https://www.coingecko.com/fr
Letter No. 41: The Fed's 0.5 % interest rate cut; 2025, the year of euphoria?
At the time of writing, the price of Bitcoin is 65,511 $ (on 09/27/24).
2025, the year of euphoria?
Below, you can see a chart comparing Bitcoin's performance after each halving. The black curve represents this cycle. We can see that we are halfway through in terms of duration and only at the beginning in terms of performance. However, we believe it is unlikely that we will exceed the green curve, which represents the previous cycle. The maximum performance of the green curve, measured from the start of the halving, reached +690 %. For this cycle, we anticipate a more modest performance, probably between 100 % and 300 %.
Historically, previous cycle peaks occurred later in the cycle. Comparing trends suggests potential peaks between April and November 2025. We believe 2025 will be the year of a euphoric bull market. Several factors support this outlook: interest rates that have peaked, slowing inflation, a pronounced market consolidation of more than six months, and growing institutional interest in crypto, facilitated by products such as ETFs.
Glassnode
Bitcoin: Pi Cycle Top Indicator
The indicator Pi Cycle Top has historically proven effective at timing market cycle peaks with an accuracy of up to three days. It is based on the 111-day moving average (111DMA) and a multiple of the 350-day moving average (350DMA x 2).
During the last three market cycles, we observe that when the 111DMA (in yellow) rises and crosses the 350DMA x 2 (in green), it coincides with a Bitcoin price peak.
It is also interesting to note that 350 / 111 gives 3.153, which is very close to Pi = 3.142. This is, in fact, the closest division to Pi using whole numbers. For this reason, this indicator is named that way.
This once again illustrates the cyclical nature of Bitcoin's price movement over long periods, while showing notable precision during its adoption phase.
With the consolidation Bitcoin has experienced since March, the 111DMA has decreased slightly. This implies that for this moving average to cross the 350DMA, Bitcoin's price will need to reach approximately 100,000 $ at a minimum.
Bitcoin Magazine Pro
The FED interest rate cut of 0.5 %
The current and future decline in Fed interest rates is favorable for risk assets, such as crypto and equities. The United States is struggling to keep these rates high for any longer, at the risk of causing a severe recession and a significant rise in unemployment, which is already underway. It is crucial to understand that Fed interest rates play a central role because they influence all prices and asset classes, as well as the primary unit of measure: the dollar.
Below is a curve illustrating the history of FED interest rates in the United States since 1970. We can observe Paul Volcker's major maneuver in the 1980s, when he fought inflation by raising rates up to 20 %! However, the situation is very different today: at the time, US debt was much lower. Now, it is an uncontrollable mountain of debt. We notice that over the decades, the FED is able to keep rates lower and lower for shorter and shorter periods. This is easily explained: with growing debt, it becomes increasingly difficult to raise rates without causing the interest on this debt to skyrocket. This interest is now the second and almost the first budgetary item of the United States along with that of the military.
In blue, the total US debt in trillions of dollars.
Source : https://tradingeconomics.com/united-states/interest-rate
It is observed that inflation in the United States has decreased. Although it has not yet returned to the 2 % target, it is getting closer. The striking correlation between the increase in inflation and the expansion of the money supply in 2020, during the COVID-19 crisis, is evident. The relationship between money creation and inflation is glaring.
In blue, the M2 money supply in the United States in billions of dollars.
Source : https://tradingeconomics.com/united-states/inflation-cpi
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For any questions, or if you would like to learn more about our services, please feel free to contact us: tristan.g@crypto-assets-management.com. You can also schedule a quick phone call of a few minutes by following this link.
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We are saved with the AMF under the registration number for digital asset buy/sell activities against legal tender and digital asset exchange against other digital assets: E2023-084.
— Warning —
This is not investment advice, no one can predict the future.
You are solely responsible for your investment decisions.
We are not responsible for losses following a decision made on the basis of the informatwe go in this letter.
