Crypto Market Is Rising, U.S. Equities at ATHs & China Stimulus

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This Week’s Top Stories

“Harris Vows to Aid AI, Crypto Sectors in Pitch to NYC Donors” – Sunday, 22.9

• U.S. Vice President and Democratic Presidential nominee Kamala Harris pledged to support the cryptocurrency and artificial intelligence (AI) industries if she wins the upcoming November election. Bloomberg reports that Harris vowed to help grow investments in AI and digital assets during a New York City fundraiser last Sunday.
• Over the past few months, there has been speculation that Harris’ campaign might embrace cryptocurrency as a topic in the election race. Now, Harris has officially pledged support for both the cryptocurrency and AI industries. It will be interesting to see how each candidate would implement their ideas if elected, particularly Trump, who, among other things, has promised to make Bitcoin a reserve asset of the U.S. if he wins.

“Polymarket Reportedly Seeks $50M in Funding, Mulls Token as Election Bets Surge” – Tuesday, 24.9

• Polymarket is reportedly seeking $50 million in new funding and is also considering issuing its own token. The potential token would be used "as a way for users to validate the outcome of real-world events." In May this year, Polymarket revealed that it had already raised a total of $70 million over two rounds, including $25 million and a $45 million Series B led by billionaire Peter Thiel's Founders Fund.
• Bitcoin Suisse has frequently discussed Polymarket in recent months, emphasizing the potential for a future token launch and the possibility of airdrop farming. While there is no official news yet regarding a potential airdrop, the rumors of a token suggest that this could become a reality.

“SEC greenlights listing and trading options for BlackRock's spot bitcoin ETF” – Friday, 20.9

• The U.S. SEC has approved BlackRock's proposal for options trading linked to its spot Bitcoin ETF. Other companies, such as Grayscale and Bitwise, are also seeking similar approvals and are expected to receive them soon.
• While Bitcoin options can already be traded on platforms like Deribit, this is the first time a spot Bitcoin ETF has been approved for options trading. This move is expected to increase market liquidity and attract more large investors.

“China unleashes stimulus blitz to lift growth” – Tuesday, 24.9

• China has unleashed a swath of stimulus measures including cuts to its benchmark interest rate as Beijing battles a slowdown in the world’s second-largest economy.
• More fiscal measures are expected to be announced before China's week-long holidays starting on Oct. 1, after a meeting of the Communist Party's top leaders showed an increased sense of urgency about mounting economic headwinds.

A Quick Crypto Overview

At the time of writing, Bitcoin is trading above $65’000, its highest level since the beginning of August. Despite September historically being one of the weakest months for Bitcoin, BTC is now up more than 11 percent for the month so far. Ethereum is trading above $2’600, still below its end-of-August level, but also up for the month of September. The total crypto market capitalization has recovered well from its early September low, currently sitting at $2.25 trillion. AI tokens have performed strongly over the past week, alongside memecoins. TAO and WLD are both up around 30 percent, while memecoins like WIF and SHIB have gained 25 percent and 30 percent, respectively.

Chart of the Week

This week, we want to highlight a shift in the market structure of Bitcoin. Below, we have illustrated the recent price action since its last all-time high in March. As shown, Bitcoin experienced a series of lower highs and lower lows from March to the end of August. However, with the most recent low at the beginning of September, Bitcoin has, for the first time since March, recorded a higher low compared to the low in August. Today, Bitcoin has also reached a higher high compared to its last high at the end of August. This marks an interesting shift in structure, and we are now watching for another potential higher low above the most recent low from early September.

What’s Happening On-Chain?

In the realm of on-chain trading, an unexpected event has garnered significant attention over the last few weeks – though surprises in this space are hardly uncommon. Have you heard about Moo Deng, the baby pygmy hippo living in a zoo in Thailand? The two-month-old baby pygmy hippo has been going viral on social media over the past couple of weeks. Unsurprisingly, some on-chain enthusiasts have capitalized on this trend by launching a Moo Deng token. MOODENG, which was introduced on Solana, has recently surpassed a market capitalization of $200 million and has surged over 1’000 percent since its launch on September 18. Remarkable times indeed!

Digital Asset Fund Flows

Digital asset investment products saw net inflows for the second consecutive week, following a turnaround the week prior in light of the Fed's rate cuts. Last week, total net inflows into digital asset investment products reached $321 million, with Bitcoin accounting for $284 million of that total. In contrast, Ethereum experienced outflows for the fifth straight week, amounting to $29 million last week.

Switzerland continues to post solid net inflows, with over $63 million, placing it second behind the U.S., which saw $277 million. These two countries are in a league of their own, with Brazil coming in third with a modest $1.4 million of net inflows, while countries like Germany, Sweden, and Hong Kong saw net outflows last week.

Although the week started quietly on Monday, flows into Bitcoin spot ETFs picked up significantly over the last three days, with net inflows now exceeding $600 million so far this week. And guess what? Ethereum spot ETFs are finally starting to gain momentum as well. While Monday saw $79 million in net outflows, Tuesday and Wednesday recorded net inflows of $62 million and $43 million, respectively.

Market Sentiment

Not surprisingly, both the stock and crypto markets are currently in Greed territory. The stock market is even on the verge of Extreme Greed (72), the highest level since April of this year. In contrast, AAII members are less bullish on the stock market than last week, with 49.6 percent expressing a bullish outlook and 23.7 percent being bearish for the next six months. The special question in this week's survey concerned last week's Fed rate cut—57.3 percent believe it was the right move, while 6.5 percent think the Fed should have left interest rates unchanged.

Looking at the crypto fear and greed index below, sentiment appears primed for further upside. The index has just reached a new high, its highest level since early August.

Other Relevant News

• MicroStrategy purchased another 7,420 bitcoins between September 13 and September 19, worth approximately $458.2 million, with an average purchase price of $61,750. – Link
• Celestia Foundation announced that it has completed a $100 million financing, led by Bain Capital Crypto, with participation from Syncracy Capital, 1kx, Robot Ventures, Placeholder. – Link
• Eigen Foundation announced that transfer restrictions on the EIGEN token are expected to be removed on September 30th, 2024. – Link
• According to CNBC, SBF's ex-girlfriend and Alameda CEO Caroline Ellison was sentenced to 2 years in prison by a federal judge in New York on Tuesday. – Link
• PayPal Enables Business Accounts to Buy, Hold and Sell Cryptocurrency. – Link

Looking Ahead

The crypto market has gained significant momentum this week, with Bitcoin shifting its market structure for the first time since March. It remains to be seen whether this structural shift will ignite a fresh upward trend in the coming months. U.S. equities, such as the S&P 500 and Nasdaq, are trading at all-time highs, and market sentiment analysis shows participants are becoming increasingly greedy. However, history has shown that the market can remain in a state of greed for some time. With historically positive months ahead for Bitcoin and the U.S. elections around the corner, the crypto markets could be set for a strong performance in the coming months.

Next week, we will publish a new article focusing on Bitcoin’s seasonality. We will highlight how Bitcoin and the S&P 500 have historically performed in the year following U.S. elections and shed light on price action after U.S. rate cuts. The article will be published here.

Below, you can find some of the key data releases and events to watch out for next week.

Today, Friday, 27 September 2024

• CZ will likely be released from prison two days earlier than expected

Monday, 30 September 2024

• Japan – Unemployment Rate
• Japan – BoJ Summary of Opinions

Tuesday, 1 October 2024

• Euro Zone – CPI, Core CPI

Tuesday & Wednesday, 1-2 October 2024

• CV Summit in Zug

Thursday, 3 October 2024

• Switzerland – CPI
• USA – Initial Jobless Claims
• CCA Token Summit in Vaduz

Friday, 4 October 2024

• Switzerland – Unemployment Rate
• USA – Unemployment Rate