Bitcoin - Week 41

War, hyperinflation, soaring oil prices, money printing… Faced with this chaos, Bitcoin finally seems to be doing well.

Bitcoin – third quarter review

After dropping 58% in the second quarter, bitcoin rallied 4% in the third quarter.

Its market capitalization reached $383 billion at the end of September. Or 38% of the entire market. In other words, there are still 62% of shitcoins that will sooner or later go out of fashion.

While daily trading volumes sank by 44%, the frail 4% appreciation nevertheless makes BTC the best performing investment in Q3…

Anthology of performances of other assets:

  • Precious metals: 1.3%
  • Gold: -2.9%
  • US bond market: -4.2%
  • 10-year US debt securities: -4.7%
  • Multinational debt securities: -6%
  • European stock market: -9.7%
  • US stock market: -9.3%
  • Raw materials: -7.5%
  • Real estate: – 13%

The big winner, however, was the dollar. The greenback appreciated by 6.5% against the euro. Conversely, the GBP/USD pair has collapsed, losing more than 22% over the past nine months.

It is the carnage on the side of the traditional markets, battered by inflation and the monetary tightening of the FED. But Bitcoin is holding up and NYDIG thinks $17,500 was the “bottom of this cycle”.

The New York firm recalls in its report quarterly that “Bitcoin has gone through four major price cycles, each of which was characterized by a parabolic rise in price followed by a steep decline.”

The following graph illustrates the duration and severity of the current drawdown (74.5% against ATH) compared to previous cycles:

“This cycle may not repeat itself exactly, but history often rhymes”can we read in the report.

When is the bull run? Who knows… It is certain, however, that the decline in confidence in sovereign nations and central banks could soon serve as a catalyst. For NYDIG, the recent actions of the Bank of England are telling:

“Investors and citizens could increasingly lose faith in elected officials and central banks as the global economic slump continues.”

The old lady already doubles the bet

As a reminder, at the end of September, the British Chancellor of the Exchequer Kwasi Kwarteng unveiled tax cuts for the rich (£45 billion). This policy combined with the explosion of public deficits (energy shield) has caused a vertiginous fall in the value of gilts (British government bonds) on which pensions depend…

So much so that the Bank of England found itself forced to take out its printing press. The BoE has been buying huge amounts of debt since September 28 to avoid colossal losses to pension funds, including 70% assets are invested in bonds.

Without much success since the borrowing rates of the British government started to climb again, forcing the BoE to double the bet by buying 10 billion pounds sterling worth of gilts every day.

This £65 billion mini QE is supposed to end on Friday. And after ? Well… Pension funds are already calling for an extension of QE until October 31, potentially 110 billion more. That’s about 20% of all the money injected via QE since 2008…

L’Europe is no exception. France, for example, has just announced 100 billion for its energy shield. Bond yields in France, Germany, Italy and Spain are reaching levels we haven’t seen since the 2012-2014 debt crisis.

These are troubled times and these hastily printed billions are likely to shake confidence in central banks, fiat currency and European warring politicians.

Although everything is not yet obvious to everyone, many have the intuition that the headlong rush is accelerating. The population will wake up sooner or later to the limits of growth (peak oil) and debt.

“If there is a loophole, it will be used” – Christine Lagarde, President of the European Central Bank [à propos du Bitcoin], which will very soon imitate the Bank of England. Escape…

The real currency is the joule

The reaction of the United States to the decision of OPEC+ to lower its oil production was not long in coming. The White House accused the cartel of “align with Russia”.

Which is probably true. The MLS prince did not forget that Joe Biden had sworn during his campaign to make the kingdom one “outcast” .

Perhaps also Saudi Arabia feels it is time to review its alliances and abandon the petrodollar. After all, its biggest customers in China and India would be more than happy to buy the black gold in yuan and rupees.

The last time Saudi Arabia challenged the United States was in the early 1970s. Back then, Riyadh provoked an oil shock to induce Washington to stop Israel’s colonization of Palestine.

But at the end of the day, King Faisal bin Abdulaziz Al Saud will be assassinated and the Americans will force the kingdom to sell its oil only in dollars. This was the birth of the famous “petrodollar”. A dirty story…

A leading Democratic senator has already proposed blocking all arms sales to Saudi Arabia with the kingdom.

“As chairman of the Senate Foreign Relations Committee, I will not greenlight any cooperation with Riyadh until the kingdom reevaluates its stance on the war in Ukraine.”said Senator Menendez in a statement obtained by POLITICO. ” Enough is enough “.

In other words, the West risks hyperinflation if energy continues to be used as a weapon. This is likely to continue, to the chagrin of Europe where 98% of the population thinks they prefer to save in euros rather than in bitcoins.

Not for long…

Glassnode Weekly On-Chain Report Summary

Conclusion of report similar to that of NYDIG:

“Several metrics indicate that the bottom is behind us. We see many similarities with the bottoms of previous cycles. »

As for the timing of the bull run, Glassnode believes that “If history repeats itself, we will have to wait several more months”.

Among the many graphs offered by GN, here is that of BTC withdrawals from exchanges by the whales. There has been an increase in withdrawals in recent weeks, which is a good sign, as the migration of whales always prefigure the bull runs.

Bitcoin: whales deposits and withdrawal volumes from exchanges

Among the interesting information in the report, note that “50% of the BTC in circulation show a latent gain”. Otherwise, “3.7 million bitcoins have not moved for at least seven years”.

Hodl! Google just accepted Bitcoin…

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