How to Navigate the New Serge in Bitcoin

November 18, 2024

Subject: Navigating the Bitcoin Surge: What's Behind the Latest Rally?

Dear Friends,

Bitcoin has once again captured the financial world's attention with a dramatic surge to new all-time highs above 93,000 on November 13th.

Here is an overview of what is fueling this latest rally:

Monetary Policy Adjustments: The Federal Reserve's recent decision to cut rates by 50 basis points has created a favorable environment for risk assets like Bitcoin. Lower interest rates typically encourage investment in assets with higher potential returns which Bitcoin and other cryptocurrencies are offering in this new environment of digital currency acceptance.

Presidential Support:  The biggest single reason for the recent surge in price is Donald J. Trump winning his second term as President of The United States. Trump has said publicly that he supports digital currencies like Bitcoin and would consider creating a Crypto Trust for the US Government.

Inflation Hedge: Amidst rising inflation concerns, many are turning to Bitcoin as a potential hedge, much like gold. With the Federal Reserve's actions, the appeal of Bitcoin as an inflation-resistant asset has intensified.

Bitcoin ETFs: The approval of Bitcoin Spot Exchange Traded Funds (ETFs) earlier in the year has significantly boosted institutional investment in Bitcoin. These ETFs have provided a more accessible way for traditional investors to gain exposure to Bitcoin's price movements without directly owning the cryptocurrency.

Corporate Investments: Companies like MicroStrategy have announced plans to increase their Bitcoin reserves with substantial investments. This move reflects strong corporate confidence in Bitcoin's future value.

Social media: Posts on platforms like X show a surge in investor enthusiasm. The sentiment is overwhelmingly bullish, with many predicting Bitcoin could reach six figures per coin soon.

Technical Analysis:

Bitcoin has broken out of a seven-month long downtrend channel, retesting this channel as support around 73,000. Once the breakout was tested, and Trump was confirmed the winner of the 2024 Presidential election, BTC quickly ran up in price to over 93,000 in seven days. It has been consolidating those gains in a sideways trading pattern since Nov. 13th.

Altcoin Reaction: Following Bitcoin's lead, other cryptocurrencies like Ethereum, Doge coin, and Solana have also seen significant gains, with Ethereum moving up over 41% in a week. This trend suggests we might be on the cusp of an 'alt-season', where altcoins significantly outperform Bitcoin. Not all 9,700 altcoins will move higher. The most popular ones will move the most.

Trading Volumes: There has been heavy volume on exchanges like Coinbase, indicating robust buying activity. Spot buyers are entering the market in droves, suggesting strong demand.

Looking Forward:

While Bitcoin's future looks bright, it is important to approach any investment with caution after a big move up in price. The crypto market is known for its volatility, and while the current sentiment is positive, investors should be prepared for corrections.

The influx of institutional money and regulatory developments will continue to play pivotal roles in shaping Bitcoin's trajectory.

Conclusion:

Bitcoin's recent surge is a confluence of macroeconomic trends, institutional adoption, and a shift in investor sentiment driven by support from President elect Trump.  As we move forward, staying informed and maintaining a balanced perspective will be key for anyone involved in the digital currency space.

Stay tuned for more updates, and remember, while the winds are bullish now, investing in cryptocurrencies involves considerable risk. Always conduct your due diligence. If you have questions about the information provided in this newsletter, please contact Shawn Loddy at the SML Advisory website. www.smladvisory.com or by email at shawn@smladvisory.com.

Note: All investment involves risk, including the potential loss of principal. This newsletter is for informational purposes only and should not be considered as financial advice. Please consult a Licensed Financial Professional before acting on any information provided by this newsletter.