Weekly Market Analysis with Mike Ermolaev
Is this Uptober yet? In this week’s GoMarket digest hosted by market analyst Mike Ermolaev, we dissect the ripple effects of Middle East tensions on the crypto market, among other news. Let’s dive right in!
Middle East Tensions Trigger Bitcoin Dip
Bitcoin saw a sudden decline after Iran launched missiles at Israel on Tuesday, reflecting the anxiety across global financial markets. Former Israeli prime minister Ehud Barak suggested that Israel may retaliate with a large-scale airstrike targeting Iran’s oil infrastructure.
Bitcoin's recent 7-day range between $60,047 and $66,304 reflects the volatility as investors assess the risks of further escalation. The uncertainty surrounding the conflict is likely to keep markets on edge. The Crypto Fear & Greed Index currently indicating "Fear" at 41, compared to last week’s "Greed" level of 64.
Source: Coinstats
Crypto Weakness Likely Short-Term Amid Positive Macro Signals
QCP Capital suggests that despite the heightened geopolitical tensions which caused significant market uncertainty, the current selloff in crypto is likely a short-term phenomenon, thanks to the strong correlation between crypto and U.S. stocks. If the U.S. stock market continues its rebound, cryptos might be next in line to bounce back, hinting that broader economic trends are still driving risk assets.
QCP Capital also pointed out that although Middle Eastern tensions have impacted Bitcoin during its historically strong month of October, they expect the broader trend of "Uptober" to prevail.
Rate Cut Prospects and Strong Labor Market Boost Crypto Sentiment
Crypto enthusiasts may find some additional reassurance in Jerome Powell's recent comments, which suggested potential rate cuts in 2024 — traditionally a positive outlook for digital assets. Central banks are reducing interest rates globally, including the Federal Reserve and the People's Bank of China, so cryptocurrencies are positioned to gain momentum. As already noted in our previous editions, historical data shows that rate cuts typically reduce borrowing costs, which in turn encourages investors to allocate more capital towards riskier assets like Bitcoin.
With U.S. ADP payroll numbers beating expectations, the U.S. labor market appears to be gaining momentum. The next question is whether the upcoming non-farm payroll report will confirm this trend. A thriving labor market, combined with anticipated interest rate cuts, could provide a significant boost to risk assets, including crypto. Additionally, macroeconomic data releases, such as the U.S. Consumer Price Index (CPI) and inflation figures set for October 10th, will be crucial in assessing their potential impact on Bitcoin and the broader crypto market.
Bitcoin Bull Market: Potential Peak in 2025?
According to CoinMarketCap Research, the current bull market is estimated to be 40.66% complete, suggesting that there is still substantial growth potential. Based on Bitcoin's post-halving dynamics, experts predict the market cycle peak could occur between mid-May and mid-June 2025, approximately 518 to 546 days after the most recent halving event. This time frame is slightly ahead of the usual pattern, with Bitcoin progressing nearly 100 days faster than previous cycles.
Source: CMC Q3 Report
Moreover, Bitcoin's price performance has historically been marked by significant gains following halving events. For example, Bitcoin's current cycle has seen a 402.59% increase, which aligns with its history of experiencing notable growth post-halving. Analysts believe that despite price declines observed in Q3, a combination of institutional adoption, ETF developments, and strong macroeconomic conditions could sustain this upward trajectory, possibly setting a new precedent for Bitcoin's long-term price behavior.
Senate Bill Expands CFTC's Crypto Role and Advances Tokenized Financial Assets
According to reports, a new U.S. Senate bill, which recently passed a subcommittee vote, could grant the U.S. Commodity Futures Trading Commission (CFTC) expanded authority over crypto trading and regulation. It recommends using tokenized shares of money-market funds as collateral, making it a key step in combining traditional finance with blockchain technology.
Firms such as BlackRock and Franklin Templeton could see tokenized shares of their money-market funds being traded as collateral by the end of the year. Notably, BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) has already demonstrated the growing potential of blockchain-based tokens for traditional investments, becoming the largest tokenized Treasury fund within just six weeks of its launch and surpassing a $500 million market value by July. As digital assets inch their way into traditional finance, the industry's hesitant optimism starts to seem more warranted.
SEC Appeals Ripple Ruling
The US Securities and Exchange Commission (SEC) has filed an appeal against the recent court decision in favor of Ripple, citing inconsistency with decades of well-settled law.
The regulator is seeking a review of Judge Analisa Torres' decision from July 2023, which ruled that XRP, when sold on public exchanges, did not meet the definition of a security and thus was not subject to the SEC's investor protection laws. In a significant blow to the SEC, a court ruling shields $757 million worth of XRP transactions from regulatory oversight. However, the SEC was partially successful, as Torres ruled that $728 million in XRP sales to institutional investors should have complied with securities regulations, and she imposed a fine of $125 million, though this fine has been put on hold pending the appeal.
Ripple CEO Brad Garlinghouse criticized the SEC's decision to appeal, calling it "misguided" and "infuriating," though not unexpected.
Source: X
Metaplanet Expands Its Massive Bitcoin Holdings
Meanwhile, Japanese public company Metaplanet has purchased an additional 107.913 BTC for ¥1 billion ($6.9 million), bringing its total holdings to 506.745 BTC ($32 million). The recent purchase was made at an average price of ¥9,266,724 per Bitcoin, which adds to its accumulated Bitcoin investments since May. The company's total Bitcoin acquisitions now amount to ¥4.75 billion ($32.7 million) at an average purchase price of ¥9,373,557 per Bitcoin.
Businesses are increasingly diversifying their portfolios by investing in Bitcoin, with Metaplanet being an example of a company expecting digital currencies to provide a reliable hedge against economic uncertainty.
Closing Thoughts
The crypto market is closely linked to macroeconomic trends, geopolitical risks, and regulatory changes. As tensions in the Middle East affect market sentiment and key economic data looms, staying informed is essential. Each week, dive into vital insights and updates with GoMarket Weekly — your source to stay informed and stay ahead.
October 4, 2024
