BTC/USD Analysis - Week 36

BTC/USD is still down 60% year over year, flirting with a fresh low below $20,000. Let’s be more than happy to take advantage of such a price before the inevitable bull run. For this winter…

Can the rate hike last?

We have an appointment this week with the European Central Bank. Goldman Sachs expects interest rates to rise 0.75%. We would then rise to 1.25%. This is apparently enough to make bitcoiners chilly…

However, the inflation figures released last Wednesday again proved painful, at an all-time high (9%) for the euro zone. We are close to 10% for the whole of the EU, and the worst is yet to come…

Will rising rates magically flow gas into pipelines and lower energy prices? No. Christine Lagarde had also conceded half-words a few months ago.

That said, the rise in the cost of money is helping to curb the haemorrhage of the euro. The single currency fell below $0.99 for the first time since 2003, increasing the bill for the old continent, which imports 62% of its energy.

Thus, all the central banks of the world are obliged to align themselves with the FED which should once again raise its key rate by 0.75% on September 21st.

The chairman of the Fed has indeed declared to Jaon Hole that inflation must be brought under control at all costs:

“It is very likely that labor market conditions will deteriorate (due to rising rates). […] But if we fail to restore price stability, the pain will be much greater. […] Today, we consider that the debate is closed and that our responsibility to guarantee price stability is unconditional. »

Jerôme Powell then echoed Christine Lagarde:

“It is also true, in my view, that the current high inflation in the United States is the product of high demand and limited supply. And that the tools of the Fed act mainly on demand. »

In other words, J. Powell knows well that the rise in rates will have no impact on the limited supply of energy. Oil does not print. His hope is that this monetary tightening will increase unemployment in order to reduce demand and therefore inflation. “We will continue (to raise rates) until we are sure we have done the job”did he declare.

A slew of central bankers rallied around Powell at this annual retreat in Jackson Hole. The leaders of the Bank of England, the Swiss National Bank, the Bank of Japan, the Bank of Korea and several ECB officials have clearly signaled that interest rates will rise until inflation slow down significantly.

Admittedly, but can states really afford high rates? No… Just look at the trajectory taken by public debt since the oil peak of 2008 to be convinced.

Take the example of France. The 2021 budget deficit stood at 160 billion euros. To be compared with tax revenues of 280 billion euros!

If the 10-year borrowing rate rises to 4%, the repayment of only interest on the debt would become the nation’s first budget, ahead of education or defence. It will not happen.

Admittedly, it is possible to deceive for a year, but the mathematicians who advise governments will quickly remind them of the exponential nature of compound interest.

The FED itself indicates in its forecasts that it expects to lower rates as early as 2024…

The ECB will therefore continue to print to avoid government bankruptcy. The sovereign credit risk is too high in Europe with Italy which is already driving its debt to 4%… In addition, the legislative elections of September 25 could bring to power a partisan political current of Italexit

This would suit Russia, which does not skimp on its efforts to encourage the whole world to turn away from the dollar and the euro to trade with each other. The central bank and the Russian Ministry of Finance have also just agreed to legalize international transfers in bitcoin. The Russian central bank soon Hodler?

In addition, the Russian president recently added a layer by accusing the West of carrying too much debt for years without real growth to match. Hence the inflation. He accuses the United States and Europe of living on credit and taking advantage of the status of international reserve currencies (dollar and euro which together represent 80% of global foreign exchange reserves) to monopolize foreign resources:

The Seventh Eastern Economic Forum is underway in Vladivostok. The topic of the forum is: “On the way to a multipolar world”…

We are witnessing a pivotal moment in history. Major monetary upheavals are in the making and everything suggests that bitcoin will do well. It’s time to stack like never before in anticipation of a hyperinflationary winter that could well herald the start of the next bull run…

Analysis Summary on chain Glassnode Weekly

Glassnode notes that the percentage of BTC in profit fell from 64% to 51% during the recent slack from $24,000 all the way to $19,600.

More interestingly, the whales sold massively in August. The different lines of the following table show the behavior of bitcoiners depending on whether they have less than 1 BTC, between 1 and 10 BTC, up to more than 10,000 BTC. Red corresponds to sales and blue to accumulation.

“The most active cohort in the current market is whales (10k+ BTC) which started selling aggressively around $24,500”says GN.

accumulation trend bitcoin
Blue: tendency to accumulate / Red: tendency to sell

But overall, GlassNode sees the accumulation getting stronger as you can see in the following chart. Note that the illiquid supply (illiquid supply) is defined as the BTC held in the wallets with little or no spending history. Accumulation addresses (accumulation addresses) are those who received more than two payments but never spent.

“Faced with endless uncertainty, the HODLer class is resolute in its convictions. Barring a significant reversal in LTH supply, the long-term outlook for bitcoin actually remains quite constructive”can we read in the report.

BTC supply / accumulation addresses / illiquid supply
Blue curve: number of BTC held by long-term hodlers / Orange curve: number of BTC held by addresses with little or no spending history / Red curve number of BTC held by addresses that have received more than two payments, but who have never spent.

Conclusion from GlassNode:

“The bear market remains in place with prices lingering above the lows. The recent surge has finally resulted in aggressive selling by whales. However, the trend towards accumulation on a multi-year scale remains strong. HODLers and long-term holders seem unfazed by the current backdrop. »

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