Navigating the Current Bitcoin Market Cycle 🔄📈

If you are paying attention this week you’ve seen the huge pullback across the markets. BTC is back in the news and pundits (read: idiots) like Peter Schiff are taking victory laps. Don’t worry. This is healthy and expected. Bitcoin is following the same playbook as previous cycles and we are right where we need to be. Lets discuss a bit more about the bitcoin cycle

The Structure of Bitcoin's Market Cycle 📊

• Repetitive Cycles: Bitcoin's market cycle follows a remarkably consistent pattern, much like traditional financial markets just with notoriously more volatility (this is where the money is made). This pattern involves a series of stages: peak, drawdown, bottoming out, recovery, and rallying to new highs before the cycle repeats.

• Current Stage: Currently we're in the early stages of a new cycle. We've pumped out of the low and are now in the recovery phase. We expect a healthy draw back before we can regain BTC’s ATH and break new ground.

Underlying Drivers of Bitcoin's Cycle 🌐

• Macro Trends: The consistency of Bitcoin's cycles is driven by broader macroeconomic trends, particularly those related to monetary policies and global liquidity environments. We see a strong correlation between global liquidity and BTC price.

• Bitcoin as a Hedge: Despite what the talking heads yammer about, Bitcoin is less of an inflation hedge and more a hedge against currency debasement. The FED prints money and the value of BTC to the Dollar goes up. Anticipation of more monetary inflation is hugely bullish for BTC.

• Liquidity Cycles: Bitcoin's bull markets are more closely aligned with global liquidity uptrends than with its halving events. The brilliance of Satoshi to align BTC’s halvings with US election cycle means the halving usually corresponds with monetary inflation cycle. These liquidity cycles, characterized by an expansionary monetary environment, are primary drivers of Bitcoin's price movements.

Anticipated Future Trends 📈

• Next Peak Prediction: If Bitcoin adheres to its historical patterns, we can anticipate a new all-time high by the fourth quarter of 2024, with the next cycle peak occurring roughly a year later.

• Global Economic Factors: The current economic landscape, marked by substantial debt burdens and fiscal deficits, especially in major economies like the U.S., leads us to believe we will see continued central bank intervention. This could mean an expansion of balance sheets, likely supporting a recovery in risk assets, including cryptocurrencies like Bitcoin.

Implications for Investors 💡

• Opportunity for Growth: The early stages of a new cycle present great buying opportunities. Even if you didn’t fill your bags during the absolute bottom we still have plenty of time in the market to earn outsized returns. We will continue to buy through 2024 and most likely look to exit near the end of 2025.

• Importance of Macroeconomic Awareness: Understanding the broader economic context is crucial for navigating the Bitcoin market effectively. Follow the broader crypto cycle to set your entry and exits time frames but keep an eye on the macro environment as well. Black swans can and do alter history and screw up the more carefully laid plans.

• Caution and Diligence: Despite the potential for growth, the inherent volatility and unpredictability of the crypto market is real. Be prepared for severe pullbacks and don’t panic. The fastest way to lose is to get scared during a pullback and exit at the low. Take a broader view of the overall cycle to gain some perspective and stick to your investment plan.

Conclusion 🌟

We aren’t at the bottom but we are still early in the cycle, it's essential to remain aware of the larger economic forces at play and to approach your investment decisions from the perspective of where we are in the cycle. The cyclical nature of Bitcoin offers a ton of opportunity and there is still a lot of room to profit over the next 2 years. Keep adding to your bags during pullbacks, be mindful of where we are in the cycle and create a profit taking plan like we discussed in last weeks letter.

BlockBuzz™️

Quick Hitters from the week

• White Hat Hacker Reveals Compound’s V3 Flaw: KP, an anonymous hacker, spots a critical bug in Compound's Comet protocol. His discovery could have led to major fund theft, albeit at a high cost. After reporting and helping fix it, KP's $125,000 bounty request faces a DAO voting snag.

• Arbitrum DAO's Big Boost for Missed Projects: Approves a hefty $23 million 'backfund' for projects that didn't catch the initial grant wave.

• VanEck's Bullish Prediction for $IMX: Forecasts a surge into the top 25 coins by market cap, spurred by game launches like Illuvium.

• El Salvador's $1M Freedom Visa: Offering citizenship for a hefty Bitcoin or USDT investment, limited to 1,000 participants per year.

• US Job Market Beats the Odds: November's data reveals a 199k job increase, potentially strengthening the Fed's stance on current monetary policies amid inflation.

• Starknet's Hefty $STRK Giveaway: Plans to distribute a whopping 1.8 billion $STRK in 2024 as rewards and network rebates.

• Binance Pulls Out from Abu Dhabi Licensing: Decides against pursuing its license application in the region.

• Block's New Venture - Bitkey: Jack Dorsey's company unveils a self-custody bitcoin wallet, pre-order now open in over 95 countries.

• Meanwhile Group's Bitcoin Credit Appeal: Launches a bitcoin private credit fund, targeting institutions with a conservative 5% bitcoin yield.

• Seamless Protocol's Generous $SEAM Airdrop: Rewards protocol users for their active participation, now trading on Coinbase.

• FTX's $24B Tax Dilemma Slows User Refunds: IRS's massive unpaid tax claim cited as a key reason for the delay in returning funds to users.

• Google's Crypto Ad Expansion: Updates policy to include advertising of “Crypto Coin Trusts” in the US, ahead of anticipated Jan BTC ETF launch.

• El Salvador's Volcano Bond Gets Green Light: World's first Bitcoin Bond set to launch in Q1 2024, with trading expected on Bitfinex Securities.

The Twitterverse™️

A collection of the most interesting Threads on Crypto Twitter this week 🧵

WAGMI

For the Crypto Culture

Quick note* Hey guys, this is a new section we are trying out. It’ll be memes, funny stories and just stuff about crypto culture. For those new to the culture WAGMI stand for We All Gunna Make It. Let us know if you like the idea

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