{"id":2718,"date":"2023-10-20T13:40:19","date_gmt":"2023-10-20T11:40:19","guid":{"rendered":"https:\/\/www.mereau-finance.com\/letter\/lettre-n30-le-pire-est-passe-court-vs-long-terme-or-vs-base-monetaire\/"},"modified":"2023-10-20T13:40:19","modified_gmt":"2023-10-20T11:40:19","slug":"letter-n30-the-worst-is-over-short-vs-long-term-gold-vs-monetary-base","status":"publish","type":"letter","link":"https:\/\/www.mereau-finance.com\/en\/letter\/lettre-n30-le-pire-est-passe-court-vs-long-terme-or-vs-base-monetaire\/","title":{"rendered":"Letter No. 30: The worst is over; Short vs. long term; Gold vs. monetary base."},"content":{"rendered":"

Hello everyone,<\/p>\n\n\n\n

The purpose of this letter is to inform you about the current situation 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.<\/p>\n\n\n\n

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News<\/h3>\n\n\n\n
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\u00abGlobal coordination\u00bb: G20 countries are expanding their arsenal to regulate cryptocurrencies<\/a>. G20 countries have just agreed on a roadmap for the coming years regarding the crypto ecosystem. What does it provide for, and what could this change for the ecosystem?<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

Ferrari will accept cryptocurrency payments for its vehicles<\/a>. While cryptocurrencies are increasingly accepted as a means of payment, it is Ferrari's turn to take the plunge. What do we know about this latest novelty from the famous automotive brand?<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

Ethereum: ETH will be at $8,000 in 2026 according to a British bank \u2013 What do we think about it<\/a> According to an estimate by Standard Chartered Bank, the price of ETH could reach $8,000 by the year 2026. What should we think of such a forecast?<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

JPMorgan is launching a tokenization service on the blockchain with BlackRock and Goldman Sachs as its first clients<\/a>. The latter makes it possible to fluidify, simplify and accelerate the exchange of guarantees by tokenizing them. A service launched today, and already requested by giants BlackRock and Goldman Sachs.<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

Purchasing NFTs on Ethereum with a CBDC: Mastercard demonstrates the success of its solution<\/a>. As part of a pilot project with the Reserve Bank of Australia, Mastercard demonstrated that it was possible to buy an NFT on Ethereum with a CBDC. How does this interoperability solution work?<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

Ethereum (ETH): barely 2 hours are now needed to become a validator<\/a>. While it used to take over a month of waiting to become a validator on Ethereum (ETH) last June, it takes barely 2 hours today. Let's take a look at the latest important staking statistics.<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

Bitcoin, why the US government holds 5 billion dollars in BTC.<\/a> 200,000 Bitcoins in US vaults according to firm 21.co. The US owns these Bitcoins following the Bitfinex hack and the <\/strong>seizure of the dark web market Silk Road.<\/p>\n\n\n\n

\u2013<\/p>\n\n\n\n

The company Blockchain Capital is offering two new funds totaling 580 million dollars<\/a>. Who said venture capitalists had lost interest in the crypto ecosystem? Venture capital firm Blockchain Capital has just closed two new funds totaling $580 million. A closer look at this new initiative.<\/p>\n\n\n\n

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Fundamental Analysis<\/h3>\n\n\n\n
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Bitcoin's price over the last six years in euros and on a logarithmic scale.
Source : https:\/\/www.coingecko.com\/fr<\/a><\/figcaption><\/figure>\n\n\n\n
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The price of Bitcoin at the time of writing is 28,400 $ (on 10\/19\/23).<\/p>\n\n\n\n

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The worst is over:<\/span><\/strong><\/h4>\n\n\n\n
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The chart below compares Bitcoin's market capitalization and realized capitalization. It is only during the most significant downturns that the market cap has fallen below the realized cap. Outside of these extremely painful intervals, the market cap remains above the realized cap most of the time. <\/p>\n\n\n\n

As we can see below, these periods occurred only once per cycle. We have exited them since the beginning of 2023. Therefore, based on the history of previous cycles, we can think that the worst is over<\/strong>.<\/a><\/p>\n\n\n\n

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Market Capitalization & Realized Market Capitalization
Glassnode<\/figcaption><\/figure>\n\n\n\n
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Short-term vs. long-term investors:<\/span><\/strong><\/h4>\n\n\n\n
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During these fairly long winters, Bitcoin's price and capitalization remain relatively stable. However, a process is taking place gradually and rather invisibly: coins are changing hands and migrating to the wallets of longer-term investors. This is when the coins begin to \u00abmature\u00bb and prepare the market for the next bull run. Once almost all the coins have changed hands to long-term investors, no one will want to sell anymore. And since adoption continues gradually, prices will mechanically have to rise, until it reaches the ears of the mainstream media and the self-fulfilling phenomenon spirals into a new cycle.<\/p>\n\n\n\n

Below, the blue arrows represent long-term investors and the red arrows represent short-term investors. There is an alternation in the dominance of one and then the other during the cycles.<\/p>\n\n\n\n

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Realized capitalization by age bands on Bitcoin
Glassnode<\/figcaption><\/figure>\n\n\n\n
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The rotation of Bitcoin coins among long-term investor subsets:<\/span><\/h4>\n\n\n\n
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On the Glassnode chart below, we can observe the phenomena of changing hands within the subset of long-term investors. In orange, investors who have held their Bitcoin coins for 6 to 12 months, in green those who have held them for 1 to 2 years, and in blue, those who have held them for 2 to 3 years.<\/p>\n\n\n\n

We notice that all of these long-term investors hardly hold their Bitcoin anymore during market peaks (January 2018 & April 2021). Conversely, the peak of capital held by investors in the 1-to-2-year age bracket (in green) often aligns with the deepest points of bear markets.<\/p>\n\n\n\n

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Capital rotation realized on Bitcoin from (6m to 3y).
Glassnode<\/figcaption><\/figure>\n\n\n\n
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Gold vs. US monetary base:<\/span><\/h4>\n\n\n\n
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While reading, I came across an interesting chart comparing the central bank money supply aggregate (M0). This aggregate measures the financing of the budget deficit by the FED, meaning the FED's purchases of US government bonds, and in short, the printing press. <\/p>\n\n\n\n

The author calculated a ratio between the price of gold and this monetary base. This means that in the chart below, on the upper part, if the black curve rises, then we are in a period of \u00abflight from currency\u00bb: that is to say, gold is climbing faster than the money supply and therefore the flight from currency has begun and one must hold gold. We can see this period from 1972 to 1984, then from 2004 to 2013, and it starts all over again today.<\/strong><\/p>\n\n\n\n

Conversely, when the currency is \u00abwell managed,\u00bb capital has no incentive to stay in gold (which is non-productive), which is normal.<\/p>\n\n\n\n

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Gold to US Monetary Base (M0)
Institute of Liberties<\/figcaption><\/figure>\n\n\n\n
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This information means that a new currency leak has begun and that it is better to hold gold (preferably physical) in your assets rather than too much cash. <\/p>\n\n\n\n

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Our service<\/strong><\/h3>\n\n\n\n
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We offer a discretionary portfolio management service specializing in digital assets. We provide comprehensive, end-to-end human guidance in this space by tailoring your portfolio allocation to your risk profile and situation. <\/p>\n\n\n\n

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Our turnkey management allows you to take advantage of this sector's growth without worrying about choosing the digital assets to put in your portfolio, conducting in-depth token research, dealing with volatility, or handling rebalancing, etc. All you have to do is read your monthly reports and invest regularly with a long-term horizon (4 years and more). <\/p>\n\n\n\n

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We do not engage in algorithmic trading or day trading; we invest for the long term in projects that we know and understand. We make monthly rebalancing adjustments in the portfolios and conduct in-depth research on the assets (especially their tokenomics) that we include in our portfolios. <\/p>\n\n\n\n

Check out our website: https:\/\/www.mereau-finance.com\/<\/a><\/p>\n\n\n\n

If you have any questions, comments, or would like to know more about our service, please feel free to contact us at this email address: tristan.g@crypto-assets-management.com<\/a> or to schedule a phone appointment with us via this link.<\/a><\/p>\n\n\n\n

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Discovery Pack<\/strong><\/h2>\n\n\n\n
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Investment of under \u20ac20,000 <\/strong><\/p>\n\n\n\n

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