166. Crypto Is Down, Here’s What You Need To Know And Where It’s Going

It's really important to remember that bitcoin and crypto is highly correlated with liquidity cycles at a global level. So as we see rates come down, money becomes easier to access and that eventually finds its way into risk on assets like crypto. The big takeaway there is rate cuts are coming sooner rather than later, which will help improve global liquidity, which is positive for crypto. And then we've also got the US election as well. So we've seen a lot of pandering towards crypto I guess over the last little while with the election coming up, but the reality is that we're starting to see both Republicans and the Democrats looking towards the crypto crackdown and looking at moving this into a way where they're a bit more open to cryptocurrency and the building and projects and investing that goes on. So hopefully positive as we go towards the election. Welcome back to another episode of the Ben and Bergs Podcast. I'm Ben, your favorite high school dropout and founder of collective shift alongside Ms. Bergs, your favorite MBA and COO of Collective Shift. Join us as we bring you world class crypto research and strategies to help you dominate this crypto bull market as well as behind the scenes view of us scanning a fully remote subscription research business here in Australia. And if you like the podcast, we'd love if you leave us a review or follow us if you are on YouTube as we come to you each and every week. Now today we're talking about the crypto market is down and why we are not worried. No time to panic. This happens very regularly in bull market, so we're going to dive into why prices are down and some of the reasons why we're expecting the markets to return. Now Bitcoin and Ethereum have suffered one of their deepest corrections of this cycle, down about 15% in the last month and has hit five month lows. Bitcoin's 27 pullback from all time highs ends a record 427 day streak without a 25 drawdown, which is very, very uncommon. Altcoins have fared far worse though, many sinking somewhere between 10 and 40% in the previous seven and 30 days respectively. And also Berg's the Fear and Greed Index shows that the worst fear we've seen since January 2023 and to think we're only agreed only last month tends to say it all. The market has completely flipped bearish in the short term, yet fundamentals are still quite strong, which is very fascinating.

Isn't it strange where you know an Ethereum ETFs been approved. It's going to start trading in a matter of weeks. There's quite a lot happening on the horizon. Yeah, the market is absolutely tanking.

Yeah. And you know, why is it selling off? Right. There's a few different things. Number one is we have some large countries actually selling bitcoin as of the time of recording. We're finally at a point where Germany has now sold off all of their Bitcoin. So three weeks ago Germany owned nearly $3 billion of Bitcoin. 49,000 BTC they owned and as of today they have sold all of it. They have just spot sold $3 billion in the last couple of weeks, which is imagine fees. They've just got the, the intern on, on Binance is jamming bitcoin, you know, with the, with the BTC USD pair.

The US government also has moved a lot of bitcoin recently, adding to market fears. And also the Mount GOX has started to begin its payments as well. So we've got a lot of bitcoin being sold off then we've also got a lot of, you know, Ethereum being sold off as well. Even One of the ICO projects from 2016, Golem sent nearly $100 million of ETH to exchanges recently. So a lot of for selling going on. A lot of fear, but yet there's a lot of fundamentally good things that are happening. Right. Even recently had Jerome Power come out and say that, you know, rates remaining high is quite bad for the economy, hinting that they might be reduced. We've got the S&P 500 ripping to all time highs. We've got, you know, money flowing into risk on assets. Everything but bitcoin and crypto, which is quite problematic. But in saying that I think we're starting to form a local bottom because of all that, a lot of the for selling is done and if we had to follow the stock market over the next few weeks, I think we'll start to see the market start to.

Return and we're getting a lot of stability from this. You run up to highs and then you form a new kind of local bottom, if you like. Checkmate explains this really, really well on a podcast that'll probably go out after this one just with how those formations happen, why they're healthy and what to expect. But it's not all doom and gloom, Ben. Corrections are a normal part of any market and we've got some awesome things coming up towards the end of the year.

Yeah, that's a good point. Before I get on those, those, those points is that, yeah, in most bull markets we have anywhere between 10 and 13 corrections on our way up to the top. And you know, the monthly chart has been super strong over the last eight to 12 months. It's basically been month over month growth for 12 months. And now we have a bit of a correction. We, we had the largest amount of derivatives, trades, longs liquidated since FTX the other week, which is nuts. We had all these meme coins being created. We had just all this nonsense of people getting way too bullish and we do need to wipe that out to build a new foundation. Basically what happens is people get super, super crazy, super excited. We get overvalued assets and it needs to be wiped out. That euphoria, that greed needs to be wiped out reset to build a new foundation to build upon and that creates a healthy market. So nothing to be concerned about. Sorry, we say something, that's a really.

Good point to look at the monthly chart to zoom out and see what the growth is like on the monthly because it really just smooths out and ameliorates all those daily and weekly crazy things that happen.

Yeah.

And yeah, the monthly chart is looking very, very strong.

100%. Now a few things we're looking at, as I mentioned before, Jerome Powell signaling incoming rate cuts, which is really good. So it's really important to remember that bitcoin and crypto is highly correlated with liquidity cycles at a global level. So as we see rates come down, money becomes easier to access and that eventually finds its way into risk on assets like crypto. So, you know, the words that Powell used the other day in the U.S. senate was that the economy is no longer overheated, signaling that the Fed is getting closer to cutting rates. However, he did note that he didn't expect to cut rates until he has seen greater confidence that inflation is moving sustainably towards 2%. So look, the big takeaway there is rate cuts are coming sooner rather than later, which will help improve global liquidity, which is positive for crypto. And then we've also got the US election as well, Berg. So, you know, where, you know, we've seen a lot of pandering towards crypto, I guess over the last little while with the election coming up. But the reality is that, you know, we're starting to see, you know, both Republicans and the Democrats looking towards the crypto crackdown and looking at moving this into a way where they're a bit more open to cryptocurrency and the building and projects and investing that goes on. So hopefully positive as we go towards the election. And I think Trump being elected would be a big benefit to crypto as well, bro.

He's rumored to speak at the world's largest bitcoin conference this month. So Checkmate said. He's one of the speakers there. All the speakers got an email saying, hey, Trump is likely going to come in. So, you know, be prepared for this. You might get bumped from your position. But could you imagine someone going for presidential candidacy speaking at one of the large, the largest bitcoin conference in the world? Isn't that just incredible?

It's nuts, mate. You wouldn't read about that, you know, a year or two ago.

And we've also got up here incoming buy pressure. So FTX creditors are going to distribute 12 to 16 billion in cash to FTX creditors. So you think that a decent portion of this goes straight back to crypto?

Yeah, we've got to.

People are getting their money back that was caught in the exchanges during the FTX collapse and they're not getting it back. I don't believe in crypto. So if you held one bitcoin, you're not getting back one bitcoin, you're getting the cash equivalent.

Yeah, correct.

So because that crypto has been taken off you and your money's gone, it's likely you're going to put that back into crypto.

Agree. Because you're probably pissed off that now you missed, you know, the low entry points and you're just going to jam that back into, into crypto so positive that, you know, people sending some of their money back from ftx, which is, which is, you know, really positive. And again we're starting to see the demand for the Bitcoin ETFs in the US start to ramp up again. So the demand for the ETFs has been the strongest it's been in over a month, with the previous week inflows totaling just a touch over half a billion.

Whilst we've also starting to see the, the ETH ETF come together and yeah, hopefully there's going to be some strong appetites once that launches later in the month. The other thing as well, from an Ethereum perspective, is that the BlackRock tokenized fund surpasses 500 million. So after launching in March, the BlackRock's build or fund has already reached their half a million milestone, eclipsing the market leader Franklin Templeton. So the tokenized assets continue to gain traction within the traditional finance space with on chain U.S. treasury products. Now totaling 1.8 billion. And Berks is really important that you know, we remember that know this is massive signal for Ethereum and tokenized assets that we've got one of the largest investment managers on the planet launching their own investment products on public blockchains, you know, which potentially could lead, you know, others like Goldman Sachs who are also looking into tokenized funds to continue building and growing, growing the space. So yeah, super exciting on that front as well.

Exactly. They're the biggest. They've got trillions of assets under management. It's insane.

Nuts. So yeah, lots of stuff going on. Very fundamentally positive. This is a bit of a correction. You know, we are looking at maybe buying the dip on a few different assets at the moment. I think a lot of the altcoins are in a really good position from an undervalued perspective. Fundamentally I think we're looking towards later this year, you know, towards the election to, to really get a, you know, the, the, the market starting to recover. But again, long term, I, I don't think the top of the cycle is going to be until later next year in my opinion. I think it's going to drag out. If you look at the previous two cycles post bitcoin halving, the peak has been somewhere in the second year after bitcoin halving. You know, a lot of people were thinking it was going to happen a lot sooner, but again people think too short term, in my opinion. I think this will drag out and continue to grind higher into next year. So lots of good stuff to come.

That gets me very excited, Ben, because that gives me more opportunity to buy.

Keep buying the dip, mate.

Well, this is the thing we talk about, you know, gatekeepers just in the world. Everyone knows a gatekeeper at their work, but there's gatekeepers in assets as well. Like thinking about boomers with property. This is our opportunity, this is our asset class to front run everyone, get in because it's bloody hard to do so and know what to actually get into ahead of everyone else. And in years to come we will be the gatekeepers of these assets. That is a very exciting prospect.

Selling it back to them. I love it.

Oh.

Selling it back at multiples. I love it.

I love it. There you have it folks. That's our market analysis for today. That's why the market's down and where we think it's going to be going over the next little while. Hopefully you enjoyed that. If you like that episode, we'd love for you to share it with a friend, someone else that's in crypto that may need this insights. It's how we grow the podcast coming to you each and every week. Thank you so much, guys, and we'll see you on the next episode.

Thanks, jp.