GM. Welcome to Milk Road, your go-to crypto newsletter that transforms you from exit liquidity into someone who anticipates market trends. Today’s highlights include insights on Bitcoin’s performance, market dynamics, and opportunities within the crypto space.
Nexo is a leading digital asset platform designed to assist clients in wealth management and preservation. Discover how Nexo can benefit you today.
Prices as of 2:00 p.m. ET. Data courtesy of CoinGecko.
ONE YEAR SINCE BITCOIN HIT ITS PEAK 🎂
Today marks the anniversary of Bitcoin reaching its all-time high of $126,198, a milestone that was quickly followed by a downturn. Over the subsequent nine months, Bitcoin’s value plummeted approximately 54%, hitting a low around $58,000 this past summer. Currently, it has rebounded to roughly $86,000, still about 32% shy of its peak. This date is significant for followers of Bitcoin’s typical four-year cycle.
To recap the cycle: Bitcoin typically reaches a peak, experiences a downturn lasting about a year, and then enjoys a rally for the following three years. According to this pattern, the downtrend may conclude today. Geoffrey Kendrick, head of digital assets research at Standard Chartered, mentioned last week that he believes Bitcoin has indeed seen its lowest point. He anticipates that today’s date will present a buying opportunity for cycle enthusiasts, which he considers a logical stance.
The turning point he referred to occurred on August 19 when the U.S. Treasury increased its buybacks of long-term government bonds from $2 billion to a minimum of $4 billion per operation. Kendrick interpreted this move as a clear indication that the down cycle had come to an end, with Bitcoin responding by rising from around $65,000 to $78,000 within three days.
In the third quarter, Bitcoin closed with a remarkable gain of approximately 42.7%, marking its best performance for this quarter since 2017. Our crypto analyst, John Gillen, shares Kendrick’s optimism, asserting that the market remains bullish until Bitcoin dips below $75,500, which is a key price point for him.
The Treasury’s bond purchases aimed to reduce long-term borrowing costs, but the bond market has had its own trajectory.
THE FRAGMENTED CRYPTO EXPERIENCE
The crypto landscape remains surprisingly fragmented, with separate applications for buying, earning yield, and borrowing against assets. However, Nexo is striving to consolidate these functions into a single platform that encompasses trading, earning, and borrowing.
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Explore how Nexo can enhance your crypto experience today.
ONE YEAR SINCE BITCOIN HIT ITS PEAK (CONTINUED) 🎂
On August 19, the yield on the 10-year Treasury bond, indicating what the U.S. government pays to borrow money for a decade, fell from 4.71% to 4.65%. However, it quickly rebounded, and has continued to rise, currently hovering around 5.3%, marking its highest level since 2002.
This increase poses challenges for Bitcoin, as a government bond now offers a roughly 5% annual return with minimal risk. Consequently, any investment in riskier assets must outperform this benchmark. This environment has led some of our PRO analysts to adopt a cautious stance.
For instance, M0xt has opted to keep new cash inactive this month. The Milk Road Macro Index (MRMI), which gauges the macroeconomic conditions favorable for risk, recently fell to -1.25, the lowest since March, and now stands at -0.86. M0xt remarked that a 5.3% yield “places a tangible cost on every dollar I invest.”
Kyle is also holding back, remaining bullish on crypto while predominantly invested. He is awaiting a potential price dip in the coming weeks to make additional purchases. Even within the four-year cycle framework, there is no unanimous agreement on the next steps.
Crypto analyst Benjamin Cowen had anticipated this month as a likely time for the cycle’s bottom, while veteran trader Peter Brandt had marked October 4, suggesting a target range of $40,000 to $50,000. As October 4 passed with Bitcoin around $85,000, it raises the question of whether this cycle’s bottom occurred earlier and less dramatically than expected, or if another decline is forthcoming.
In summary, it appears that current market dynamics, particularly the bond market, may be more influential than historical patterns. Three key indicators to monitor moving forward include: John’s pivotal $75,500 level (which we aim to maintain), the 10-year yield (a decline being favorable for Bitcoin, and an increase being unfavorable), and the developments following November 4, when larger Treasury buybacks conclude right after the U.S. midterm elections.
In case you missed it, four of our PRO analysts currently hold Bitcoin, with average entry points between $63,000 and $70,000. Each has seen gains ranging from 22% to 35%, even as Bitcoin itself remains around 32% below its peak. This illustrates the advantage of early investment, providing a buffer that maintains profitability even if Bitcoin dips to John’s $75,500 threshold.
If you’re interested in staying informed about their upcoming strategies in real-time, consider subscribing to Milk Road PRO for just a dollar for a seven-day trial.
A CALL FOR CRYPTO ENTHUSIASTS 🥛
If checking Bitcoin’s price is part of your morning routine, you spend considerable time on Crypto Twitter, and have a knack for writing, we might have an opportunity for you. Milk Road is on the lookout for a crypto-focused writer/content creator to join our expanding team.
SNACK-SIZED UPDATES FOR THE JOURNEY 🍪
Securitize is the firm discreetly supporting BlackRock, Apollo, and KKR’s transition to on-chain operations. We’ve elaborated on this in our recent article.
Aerodrome and Velodrome are merging to form a cohesive liquidity layer on Ethereum, rebranding as AERO Dynamics.
Polymarket raised $9.9 million over a single weekend, which is nearly five times the amount that Hyperliquid garnered during the same period.
Currently, tokenized assets are valued at $300 billion, a mere fraction of the $674 trillion in total global financial assets, indicating significant growth potential ahead.
Discover how Nexo can better your crypto journey today.
