Dispatch #210: Navigating North - Bitcoin and the Rate Cut

Sep 20 4 min read

Dispatch

In this patch of your weekly Dispatch:

Assets Touch All-time Highs ⛰️
A New Solana Phone 📱
A Huge BTC Stash 💰

The Big Idea

A Dance of Digital Gold and Dovish Dollars

The tension was almost palpable as Bitcoin crept up towards $60,000, peaking just above $62,000 – just as most of our savvy readers predicted in our regular poll! It was another volatile week as the Federal Reserve announced its highly anticipated 50 basis point rate cut, its first in four years. This marks a shift away from the restrictive policies aimed at battling inflation. Here are the viewpoints that matter:

The Market Mover: Fed Chair Jerome Powell explained that inflation is moving toward the Fed’s 2% target, which has allowed for this policy pivot. He also noted that the Committee now views inflation and employment risks as “roughly in balance,” signaling a more optimistic outlook from the central bank on both fronts.
Future Projections: Traders are betting this cut won’t be the last. On Polymarket, bettors are pricing in a 65% chance of a 25 basis point cut in November, with a 26% chance of a larger 50 bps cut. Looking further ahead, there’s strong consensus for additional easing in December, with a 50% chance of another 25 bps cut and a 33% chance of a 50 bps one.
In the Charts: Technically, Bitcoin’s rally from $57,675 to $61,330 has yet to spark full bullish sentiment. The futures premium remains at 6%, only slightly above neutral, while the 25% delta skew in options markets shows a balanced demand between puts and calls. This neutral tone indicates traders are cautious, waiting to see if $61,000 can hold as a support level.

So, where does that leave Bitcoin amidst these macroeconomic moves and market shifts? According to Decrypt, where a Nexo expert tuned in, it’s all about liquidity and volatility. And BlackRock’s latest memo paints a glowing picture too: despite occasional market hiccups, Bitcoin’s resilience stands out.

Bitcoin has outpaced major asset classes in seven of the last ten years. No Big Ideas this time for the HODLers on Nexo – just a smooth operation from Bitcoin.

The Latest In…

Stocks and Gold Rise

That tension in the Bitcoin charts meant a full-on price surge in other markets. On Tuesday, the S&P 500 hit a record high of 5,670.81, surpassing its July peak as investor worries about the U.S. economy eased. The index rose 0.7% on the back of a robust retail sales report and anticipation of the Fed’s rate cut. The S&P is now up more than 10% from its August low, reflecting renewed optimism.

Gold also made headlines, initially climbing to a record $2,600.11 per ounce following the Fed's aggressive 50 basis point cut. However, it retraced later in the day, settling at $2,559.15 per ounce.

The Latest In…

Ethereum: “The Microsoft of Blockchains”

Ethereum has faced a tough year in 2024, with its ETH/BTC ratio hitting three-year lows, recently dropping below 0.04. Yet, media reports that it’d be foolish to dismiss it, as Ethereum might be a contrarian investment opportunity. Bitwise’s words, not ours.

Bitwise CIO Matt Hougan notes that while Ethereum is currently out of favor, its foundational strengths make it a heavyweight in the crypto space. “People might end up looking silly if they dismiss Ethereum now,” he warns, likening it to the “Microsoft of blockchains.” Hougan argues that Ethereum's dominance in stablecoins, DeFi, and dev activity positions it well for a comeback.

The Latest In…

Seeking Your New Phone?

Solana Mobile’s new “Seeker” phone has already seen over 140,000 presales ahead of its 2025 launch. Priced at $450 for early birds, this web3-focused device features a Seed Vault Wallet for secure transactions, an updated Solana dApp Store, and the Seeker Genesis Token, offering exclusive perks within the Solana ecosystem. The only thing missing is a special "HODL" button that locks your phone for a year to prevent panic selling. 🤷

The Latest In…

Bhutan on the Bitcoin Map

The Royal Government of Bhutan holds a hefty 13,029 BTC, valued at $755М, making it the fourth-largest government Bitcoin holder globally. Bhutan also holds 656 ETH, worth around $1.5М. This impressive accumulation comes not from seizures but from the Himalayan kingdom’s active Bitcoin mining, led by state-owned Druk Holding & Investments.

Since starting its mining operations in February 2021, Bhutan has expanded its efforts significantly, utilizing hydroelectric power. The country’s mining capacity is set to increase sixfold by mid-2025, thanks to a recent partnership with Bitdeer Technologies. Bhutan's Bitcoin holdings surpass El Salvador's 5,800 BTC but fall short of the UK's 61,000 BTC.

The Week’s Most Interesting Data Story

Bitcoin’s Equilibrium

The Sell-Side Risk Ratio, which tracks realized profit and loss against Bitcoin's Realized Cap, is currently at a low level, suggesting equilibrium in the market. This indicates that few coins are being sold for profit or loss, pointing to a low-volatility environment. With Bitcoin’s price oscillating in a narrow range for months (similar to a coiling spring) heightened volatility is expected. Only two instances since 2016 have shown a tighter 180-day price range, signaling that the market may be primed for a breakout.

Now, what could be the catalyst?