Author: Ecoinometrics.
Translated by: Shen Chao TechFlow
Today's topics include:
The driving force behind Bitcoin's all-time high.
Bitcoin's performance in October exceeded expectations.
Small interest rate cuts.
Each topic is accompanied by a brief description and a detailed chart. Let's take a look.
The driving force behind Bitcoin's all-time high.
Bitcoin performed excellently during the U.S. elections. Not only did it successfully break through the $65,000 mark, but it is also pushing towards new all-time highs. This good momentum will be self-reinforcing.
Based on historical data, we can make predictions: the average return of Bitcoin in the three months following a new high is 46%, with a median of 39%.
This means that if Bitcoin's return reaches the average level, it could approach the $100,000 mark in the first quarter of 2025.
To achieve this, Bitcoin only needs to receive sufficient inflows from ETFs. The current trend is very optimistic, so we need to closely monitor this dynamic.
Bitcoin performed excellently in October.
In fact, even before the U.S. presidential election, Bitcoin's performance was already quite impressive.
In October, it was one of the few global assets to achieve positive returns, the other being gold. This is not the first time we have discussed this.
The strong performance of Bitcoin and gold over the past 12 months indicates that global macro investors are seriously concerned about the threat of dollar devaluation.
Unless the federal government suddenly takes fiscal responsibility measures, U.S. debt will face an unsustainable trend. When a certain critical point is reached, this debt will have to be monetized through the Federal Reserve.
It is not a question of 'whether' but 'when'.
Retaining at least a portion of Bitcoin in your portfolio as a hedge is a strategy you cannot ignore.
Small interest rate cuts.
Regarding debt monetization, the Federal Reserve has yet to take action.
The more urgent issue facing the Federal Reserve is ensuring that core inflation remains within a controllable range without harming the U.S. economy.
As we have discussed multiple times, current data shows:
Core inflation is not showing a downward trend.
The labor market is stable, and the unemployment rate is at a historical low.
This means that a gradual strategy of small interest rate cuts by the Federal Reserve in the coming months is the only reasonable choice.
This is precisely the focus of discussion at this week's FOMC meeting. Meanwhile, the Federal Reserve's balance sheet is still shrinking.
This monetary policy will not lead to rapid growth in money supply, but it is not entirely negative for Bitcoin.
Therefore, as long as Bitcoin's upward momentum exists and ETF inflows continue, the Federal Reserve's actions should not impact it in the short term.
That's all for today. I hope you enjoyed it. Next week, we will bring more exciting chart analyses.
Best wishes.
