- IVBF
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- Post-election effect
Dear Investors,
Welcome to the banana zone…
It was a fantastic month and kept us all very busy.
Let’s explore the highlights.
Table of Contents
Post-election effect
Post-election effect. Source: Dall-e
We mentioned last time that both candidates would be good for the markets, but Trump is a rocket fuel, especially for crypto.
And that’s exactly what happened.
Total Crypto Market Cap. Source: TradingView
Crypto market is up 48.35%
BTC is up 38.5%
ETH is up 47.7%
IVBF +53.47%
The market is overbought, and some correction is imminent.
The question is: Can investors afford to stay out?
Macro
Macro View. Source: Dall-e
A side effect of the election rally is the strengthening of the US dollar.
Dollar strength is holding stock markets back.
And what’s more, Bitcoin is even more correlated.
Alignment with Global M2. Source: Lyn Alden
According to Sam Callahan and Lyn Alden, Bitcoin moves in the direction of global liquidity 83% of the time in any given 12-month period.
That is higher than any other major asset class, such as S&P 500 or Gold.
Bitcoin & Global M2. Source Jamie Coutts
With a strong US Dollar, the Global Money Supply (M2) is declining.
Many analysts expect a 15-20% correction to align the BTC price with the M2.
However…
In the last FOMC, Andreas Larsen believes the FED is discussing a put for USD liquidity.
This could support the USD liquidity developments as early as December 2024.
What to take out of it?
Bitcoin rallied too quickly.
A correction will happen in December or early January — it already is to some extent.
However, the M2 is estimated to rise to ~127t (from current 105t) by Q1 2026.
Since the global M2 bottomed in Q4 2022, liquidity rose from $94t to $105t (+11,7%).
In that time, Bitcoin price quadrupled — from 25k to nearly 100k.
Imagine what would an M2 increase of 21% do to the price?
Current estimates are in the $140k-$180k range.
Crypto
Crypto View. Source: Dall-e
In crypto, we have a few major updates: