GLOBAL QE AND YOUR BAGS
From June until now, financial markets have seen a lot of green days with a few VIOLENT red days. The crypto markets, which often provide an exaggerated, lagging version of whatever traditional markets do, have seen mass liquidation cascades in 10-20% drawdowns on major assets. Now that the Fed has decided to cut rates (at a controversial rate to some), we’ve seen a glimmer of hope get injected into cryptocurrencies in the form of liquidity and investor confidence.
The timing of this liquidity injection was somewhat anticipated, with many thinking that the Fed could’ve even decided on rate cuts in July. With Solana holding their Breakpoint event recently and Bitcoin climbing back into the $60k range, we’re witnessing the memecoin casino open back up. Viral trends are getting tokenized at a rapid pace and people seem to be turning dust into gold (see $MOODENG, $PESTO, and others).
What does this signal going forward? Are we on the brink of the “golden bull run”? Will this rally fail like the others? Let’s look at some influential factors:
The risk appetite has grown. There was a period during July where everyone figuratively held their breath for a while. The plunge that happened in TradFi and Crypto hurt many pockets around the world. Now, we’re seeing the US and China increase liquidity through rate cuts, encouraging borrowing, spending, and investing in riskier assets. To add to that, the BOJ has maintained their position, not hiking rates further, which is a big part of what caused that carry-trade collapse over the summer. Beyond that, the general sentiment is still that things are too expensive, and that the purchasing power of the US Dollar is lower than in recent memory. This has led to a flight to hedge assets like Bitcoin and gold. This is a trend I can easily see continuing.
In TradFi, we’re seeing a lot of money being thrown into AI. NVIDIA saw an almost mythical rise over the year and many were calling a top on the “AI Bubble”. However, I think that we’re still relatively early in that sector (I could easily be horrendously wrong). For instance, OpenAI just had to TURN AWAY billion dollar investors because so much money was being thrown in their face. It’s clear that big players are piling into the sector. Banks are meeting to discuss 10-11 figure projects to power nuclear energy production directly in link with AI and tech corporations. This signals HUGE optimism in the space as a whole, which I believe will spill over.
AI and blockchain are integrating daily, and the emergence of these two in an intertwined field is showing a potential for groundbreaking innovation and application. Positive market sentiment is HUGE in crypto, and a rising tide lifts all boats. In this case, I can see a Bitcoin uptrend lead to explosions in altcoins, and that will naturally spill into the memecoin casino. I don’t see people stopping their asymmetric bets anytime soon. MOODENG and PESTO are runners here, but I wouldn’t bet against 5-10 more popular coins being birthed out of a hyperactive online culture filled with people getting massive dopamine hits from green candles. This trend will continue well into 2025.
Sure, the market is always volatile and there can be downtrends that seem like invalidation, but with Q4 on the horizon and the election cycle getting into its most heated phase, we can expect headlines to pop up every day. Government regulation surrounding these industries will probably show a lot of swings and false promises, which can boost optimism in the space even further.
It’s important to stay cautious and keep your eye out for anything that looks fishy, but I’d be wrong to say that everything doesn’t look primed for a run here. $80k, $4500, $350 are some numbers to potentially think about. Stay safe!
