Hello everyone,
The purpose of this letter is to inform you about the current situation of the crypto-asset market as well as recent news in the field. This letter is not investment advice, but merely a sharing of my personal point of view.
News
On September 7, 2021, the « Bitcoin Law »has entered into force in El Salvador, it is a historic date. Bitcoin has therefore become legal tender in El Salvador alongside the dollar, meaning that no merchant or bank can refuse a payment in Bitcoin in the country.
« The advantage of paying in crypto is the possibility of making near-instant payments without intermediaries who charge high international money transfer fees, says Revolut.
A few days ago, on September 13 of this year, a A historic transaction has been completede : A $2.1 billion transfer for a $0.82 fee and in just a few minutes! This is the true technological feat of the Bitcoin network. A transaction like this in traditional finance would have taken 4 to 5 business days and cost 1 to 3 % in bank fees, amounting to between 20 and 60 million dollars in fees.
The French platform for buying and holding crypto-assets Deskoin Announces Its Partnership with Caisse d’Epargne Eastern Europe. France, riding a wave of optimism, is trying to open up to the world of crypto-assets!
Technical & Fundamental Analysis
Bitcoin price over 1 year, since August 2020
At the time of writing, the price of Bitcoin is 47,900 $. Breaking through the 42,000 $ resistance has revived the long-term bull market that was cut short prematurely by the price decline from mid-May to mid-July.
The 53,000 $ resistance level was not broken, and a sudden drop occurred following a liquidation cascade of leverage effects Since this term is a bit technical, I invite you to click on the link to find out more. In any case, it is a one-off drop in «deleveraging» due to the excessive number of traders speculating on the price.
Since then, the price has resumed its upward trend, institutional investors (market professionals) are back after the July and August holidays, and trading volumes have therefore increased.
As we repeat in every letter: «fundamentals always prevail in the long term»!
- Long-term cycle: The bull market is resuming the beginning of its second bull leg, which could lead us to a price range between 80k and 120k $ per Bitcoin. User growth continues to rise. The fundamentals of the crypto-asset sector and Bitcoin are stronger day by day: there is a steady influx of capital into the network. The strong decorrelation between the Bitcoin price and the fundamentals has been partially closed, as the market realized it was undervaluing the price during the months of June and July. Conclusion: mid-bull market (long-term).
- Medium-term cycle: All types of investors are buying: Whales (1000+ BTC) and super whales (10,000+ BTC) shifted to accumulating new Bitcoin during the price drop over the past few weeks. Then, medium-sized holders (between 100-1000 BTC) and retail investors (<1 BTC) also started buying more recently. Conclusion: bullish for the medium term (3 months).
- Short-term cycle: Both short-term and long-term investors are now in strong accumulation, taking advantage of this opportunity to buy the dip. We are in a period of price volatility tightening, and fundamentals are moving faster than the price, which is stabilizing. We experienced a similar event in July of this year. Conclusion: bullish in the short term (1 month).
According to certain metrics, notably that of the Supply Shock (bid-ask spread), we can define a price for Bitcoin's current intrinsic value based on supply and demand (always to be taken with a grain of salt), around 60,000 $ per bitcoin.
Since the flash crash of May 2020, the US market (S&P 500) has been in an insolently bullish trend, with shallow corrections and a linear rise that has propelled it to new highs, above 3,400 points. The behavior of the S&P 500 market must therefore be monitored closely, as it influences the crypto-asset world, especially since its institutionalization.
The big question we must ask is: will central bankers let the market drop? Aren't they in a point of no return from which they won't be able to exit? Their money-printing policy (via the purchase of sovereign and private bond securities on the secondary market with freshly created money) is currently around 80 billion euros per month!
To sum up, the European Central Bank prints about 80 billion new euro banknotes every month and does not slow down the pace (or only negligibly so). This phenomenon results in the rapid devaluation (2 to 3% per year) of the euros already in circulation. If the ECB continues, the risk is hyperinflation in the eurozone, meaning a much faster devaluation of the euros in circulation.
More recently, the risk of bankruptcy of the Chinese real estate giant Evergrande could cause short-term declines in the crypto markets this week.
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— Warning —
This is not investment advice, no one can predict the future.
You are solely responsible for your own investment decisions.
We are not responsible for any losses resulting from a decision made based on the information in this letter.
