Dispatch #212: Crypto's Fortress on the Charts

Oct 04 4 min read

Dispatch

In this patch of your weekly Dispatch:

Solana in October 🍂
Eigen’s Token Launch ⛵
The FED Looks Ahead 🏦

The Big Idea

When Crypto Crushed Stocks

Granted, it’s only been a few days, yet October 2024 hasn’t started as Uptoberish as history had suggested. Media says it’s been the worst start to the best month, which could be a disappointment for our voters on X. In Big Idea fashion, we are zooming out to the entire cryptocurrency sector. Apparently, crypto is in the lead this year, compared to the mighty stock market. Here are some key points in the media this week:

Crypto Market Outperformance: Cryptocurrencies are outpacing traditional markets in 2024, with Bitcoin surging 140% year-on-year and Ethereum up over 60%, while the S&P 500 has gained nearly 30%. A recent 50 basis point interest rate cut by the Federal Reserve has reignited investor interest in risk assets, boosting the crypto sector. The market is poised for further rallies, especially after the Bitcoin halving, historically a catalyst for broader gains, marks the report.

Ethereum’s ETF Milestone: Ethereum has shown impressive growth of over 60% year-to-date, despite lagging behind Bitcoin in the short term. The launch of spot Ethereum ETFs marks a key milestone, indicating increasing institutional adoption and reducing regulatory worries. While facing competition from other Layer-1 networks, these ETFs could drive long-term growth by attracting investors and developers.

Bitcoin’s Halving Impact: Bitcoin remains the market leader, benefiting from strong supply-demand dynamics and record hash rates. The April 2024 halving is expected to be a major catalyst for price increases, with historical patterns suggesting rallies typically occur 6-12 months post-halving. Canaccord analysts believe this trend could begin soon, fueled by favorable conditions from Bitcoin ETFs and a low-rate environment.

How does that transpire to the current October expectations? For the long-term health of the cryptocurrency market, a pullback in Bitcoin’s price could be a positive outcome. With less demand for Bitcoin as an inflation hedge, the focus may shift toward Ethereum and other digital assets, allowing them to rise alongside traditional equities. Meanwhile, the surge in stablecoins, now at a record $169B, is fueling liquidity for Bitcoin’s potential rally, according to CryptoQuant’s Julio Moreno. Vetle Lunde of K33 Research adds “The Federal Reserve’s policy shift and China’s liquidity push are setting the stage for Bitcoin gains.”

The waiting game this October has begun.

The Latest In…

An Uptober for Solana

A crucial entity in the crypto space, Solana carries expectations of its own rise in October. Are they justified? Media reports suggest so.

Solana's potential for a bullish October is supported by rising network activity, strategic partnerships, and positive market sentiment.
Analysts predict the token could reach between $160 and $180 this month, with a strong $110 support level.
Onchain data reveals a significant increase in daily active addresses, averaging over three million in September, driven by heightened interest in the Solana ecosystem.
Solana’s total value locked (TVL) has climbed to a multi-month high of $5.5B.

The Latest In…

October Token Launches and Unlocks

A fresh token has entered the markets on Nexo, boasting a fully diluted value of $6.3B. Enter EIGEN, the native token of the Ethereum-based restaking protocol EigenLayer. Launched on October 1, EIGEN rose by 13% before settling at $3.77. With a total supply of 1.68B tokens, including 86M airdropped to early users, EIGEN aims to tackle challenges in digital tasks through its innovative Intersubjective concept, aka faults that are not possible to address via ETH restaking alone.

Here are more token unlocks hitting the market this October:

The Latest In…

The FED’s Careful Cuts

The week started with some macroeconomic insights. On Monday, Federal Reserve Chair Jerome Powell clarified that the recent 50 basis point interest rate cut does not signal a shift toward aggressive easing. Instead, he anticipates two more 25 bps cuts this year, depending on favorable economic conditions.

In his remarks, Powell noted the current inflation rate at 2.2% and core inflation at 2.7%. While the stock market dipped by over 150 points in response, Powell remained optimistic that inflation related to housing will eventually subside.

The Latest In…

Switching Positions on Crypto?

Last week, we discussed positive perspectives for crypto prices from China. Now, former Deputy Finance Minister Zhu Guangyao is calling for a reassessment of the government’s stance on Bitcoin Tsinghua Wudaokou Chief Economist Forum. He emphasized the growing importance of digital assets in the global economy and urged for deeper research into the technology.

Zhu emphasized the need to understand international trends, especially as countries embrace crypto through Bitcoin ETF approvals. He also pointed to the positive developments in emerging markets and BRICS nations integrating crypto into their financial systems.

The Week’s Most Interesting Data Story

Will History Repeat Itself This Cycle?

Glassnode analysts have spotted a remarkable trend in Bitcoin’s price performance. Examining BTC’s movement since its cycle low reveals a strikingly consistent pattern, even amidst vastly different market scenarios. This recurring trajectory sparks ongoing discussions among analysts regarding the underlying reasons and offers a valuable lens for understanding the structure and timing of market cycles. Notably, the recoveries seen in both the 2015-16 🔵 and 2019-20 🟢 phases echo the current rebound in 2023-24 ⚫.