Market Recovery

As predicted from our last newsletter, Bitcoin has reclaimed the $60k level. We anticipated that
the recent downturn was due to market overreaction and potential manipulation by larger holders, and this seems to be the case. Bitcoin is currently trading 10% higher than this time last week at $60,681, while Ethereum has surged 17% to $2,719.

Navigating these market conditions can be challenging without proper guidance. Data shows us that large amounts of retail investors' money were sold off last week in fear and has since been scooped up by ‘smarter’ institutional buyers. Today in a recent 13F filing, banking giant Goldman Sachs revealed that it holds $419 million in Bitcoin exchange-traded funds (ETFs). Furthermore, Blackrock's ETF now holds over 447,000 Bitcoin, 1.65% of the total supply, meaning there is likely to be a large supply shock. This news comes following the massive market crash we saw, and it is likely they were one of the 'smarter' institutions buying that dip. With our team's extensive experience and daily deep-dive research, we're confident in our ability to guide you through these unstable conditions.

Despite the extreme fear the crypto market faced over the past week, it has shown remarkable
resilience and strength in bouncing back. With the market still below its all-time highs and numerous altcoins finding support at their bottom levels, this period presents a strategic opportunity for those with medium to long-term investment horizons. Despite the recent downturn, several potential bullish catalysts are on the horizon, which could significantly impact the industry's trajectory. Investors should consider the current market conditions and evaluate the growth potential.

Bitcoin Weekly Price Chart

History Points Towards a Bullish Q4 Crypto Performance

As we navigate this period of volatility, reflecting on Bitcoin's historical performance can offer valuable insights. Historically, during U.S. presidential election years, and particularly in certain months, Bitcoin has tended to show weaker performance. Q3 has traditionally been the worst performing quarter for Bitcoin, with August and September being the most challenging months and Q4 has been the greatest performing quarter.

These historic uncertain times have created strategic opportunities for investors. During the 2020 election, Bitcoin experienced volatile dips throughout August and September before it rallied significantly in Q4, with gains of +27.7% in October, +42.95% in November, and +46.92% in December. Notably, 2020 was also a Bitcoin halving year, just like 2024.

Given this historical trend, the current market may present a golden opportunity to accumulate Bitcoin and other strong performing crypto coins while uncertainty does exist around the U.S. election. Bitcoin's performance has historically improved as election results become more defined, often leading to substantial gains in the year's final months and following year.

Monthly Performance Bitcoin Chart

Positive ETF’s Buying

Grayscale's Ethereum ETF saw its first day since launch without outflows, a very positive sign for the market and Ethereum. Grayscale has experienced $2.3 billion in outflows to date, which has been a catalyst for Ethereum's underperforming state. However, It seems this trend appears to be nearing its end.

Many investors had been anticipating that these outflow pressures would take longer to subside, but it seems they have offloaded quicker than they did in comparison to Bitcoins initial outflows. Simultaneously ETH saw $5 million in inflows on August 13th and backed it up today with $24.3 million in inflows contributing to its first weekly positive inflow since launch.

A very similar situation occurred with Bitcoin after its ETF launch, where the price initially dropped due to significant outflows in the first month, compounded by a "sell the news" trade. This trade involves investors buying an asset leading up to a much anticipated event, riding the hype, and then selling once the event takes place. However, once the dust settled, the outflows diminished, and selling pressure eased, Bitcoin rallied to reach all-time highs.

Bitcoin Chart - The first arrow indicates the ETF launch date, the second arrow indicates the start of a new price uptrend. The blue box indicates the timeframe was 27 days to occur.

Ethereum Chart - The first arrow indicates launch of ETF, blue box replicates the same time frame of 27 days it took Bitcoin to trend upwards. If it follows a similar pattern to Bitcoin, we are currently one week from reaching this.

PayPal’s Stablecoin in Demand on Solana

Paypal's stable coin PYUSD launched on Ethereum in August 2023. As a stablecoin, it is backed by real-world assets like U.S. dollars and Treasury bonds and can be redeemable 1:1 with the US dollar on PayPal. This backing ensures the stablecoin’s value remains steady, making it useful for everyday transactions on the blockchain.

In May 2024, PYUSD launched on Solana and has since seen rapid adoption, with its supply on Solana recently reaching 377 million - surpassing its 356 million supply on Ethereum. It's no surprise that PayPal is maximising efficiency by capitalising on the Solana ecosystem, taking advantage of its instant transaction times and near-zero transaction costs for its stablecoins

Solana offers much lower transaction fees and faster processing times than Ethereum, making it a very attractive option for payments. For these reasons, the Solanas network is very institutional friendly and its likely companies will likely choose this chain if they are looking for lower-cost, instant transactions.

Kamala Harris overtakes Trump

Kamala Harris has taken a slight lead over Donald Trump on Polymarket, with a 53% prediction of winning the upcoming election. This week, it was reported that Harris has hired two advisors who were key anti-crypto officials in Biden's administration. Brian Deese and Bharat Ramamurti.

This development adds to the uncertainty surrounding the presidential race and is likely contributing to the current stall in the crypto market. As the polls become clearer and Harris's stance on crypto becomes more defined, we can expect stronger market conditions to emerge.

XRP Lawsuit

XRP, the cryptocurrency linked to Ripple Labs, jumped 17% in value for the week. This rise followed a major court decision in Ripple Labs’ long-running legal battle with the U.S SEC. Ripple Labs has been fighting the SEC in court because the SEC claims Ripple sold XRP without proper registration, treating it as a security. This lawsuit has caused a lot of uncertainty in the crypto world. The recent court ruling is seen as a big win for Ripple Labs as replicated in the recent price surge.

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