Transcription
Welcome back to my 10 favorite people. Hope you're doing well.
I'm incredibly excited for today's video because Bitcoin seems to be gearing up for a great Q4. We have fully reset market sentiment. You can see that very clearly in the fear and greed index. Just last week, we had some pretty serious fear during that sell-off. We also saw quite a bit of panic selling from spot ETF holders. That also coincided with a huge wash out of leverage longs. In fact, it was the biggest leverage long liquidation day we've seen this entire year, even more than anything we saw during the tariff drama in April. And of course, last but certainly not least, we also saw the GLI make new highs recently, which means that Bitcoin should have a pretty decent October and November if the trend that has been working for us this entire cycle continues into the end of the year. And I don't see why we wouldn't expect that to happen based on what we've seen up to this point.
And now I know there's a lot of concern surrounding the looming US government shutdown, especially because it's being heavily covered by mainstream media. But I believe that if anything, that's going to end up being some short-term noise here into maybe mid-October, but it's going to have no impact on the next few months and the remainder of 2025 once that noise is behind us. And based on all of that data, it's clear to me that our base case should be a rally into Q4 for Bitcoin. What's going to happen after that? It's hard to tell as of right now. I prefer to take things a few months at a time. And although it's possible that we see a prolonged chop period before Bitcoin rallies like what we saw in 2024 and in 2023, that is not my base case as of right now. And I still believe it is unlikely that the cycle top is in for Bitcoin.
Bitcoin's price action continues to look quite solid, now confirming a higher low at that likely support region we were expecting Bitcoin to bottom, similar to the higher lows we put in in September and October of 2024 and in September and October of 2023. And this is exactly why Monday's free weekly report was called the higher low because so many investors were panicking when Bitcoin was trading below its 20-week moving average. But Bitcoin ended up closing above it by the time the weekly close occurred. And that's why it's so important to always wait for weekly candle closes before assuming something is a confirmed breakout or breakdown. Otherwise, you could end up buying or selling into a wick that ends up completely reversing before the close actually happened. And I'm sure so many people panic sold during this wick last week, thinking Bitcoin was officially breaking below its 20-week moving average. But now, we just left behind a wick and confirmed that higher low structure, making it more likely that we're going to see upside.
And like I said in Saturday's video, I bought the dip across my positions Monday morning. And I received a lot of questions as to why I'm going to wait until Monday to buy, even though I already know I'm going to. And that's because although I know I won't buy the exact low by waiting until Monday, the benefits of only having to think about my portfolio once a week and only make changes once a week greatly outweighs the extra few percentage points of performance I miss out on by not buying the exact bottom. I used to waste so much time debating almost every single day, should I buy today? What if it goes lower tomorrow? What if we end up rallying tomorrow and I miss the bottom? So, limiting myself to just one day a week makes it so much more time-efficient to make portfolio decisions. And as always, if you'd like to learn more about my portfolio automation system or mental models I use to navigate markets or common mistakes I see so many investors making, you can check out the CryptoEnjoyers program and community in the video description.
But for now, it's great to see that Bitcoin was able to save its price structure and create another false breakdown below 112,000. And it's pretty amazing that we ended up seeing a green September for Bitcoin, which is a pretty rare occurrence. We've only seen four green Septembers before this one in Bitcoin's price history. But what's even more interesting is every single time Bitcoin has had a green September historically, October and November also ended up being green with an average return of about 50%. We can add some diminishing returns there as well. So maybe let's say it's going to be 30 to 40% this time. If that pattern continues, and that aligns very likely with our Q4 rally scenario, a 30 to 40% rally for Bitcoin would put it right in our very expensive region, which is our target for this cycle. Anywhere between 140 and 150,000 would make a lot of sense to me for Bitcoin in Q4. But I believe the investors expecting and waiting for 300k Bitcoin in 2025 or early 2026 will be disappointed.
And speaking of being disappointed, MicroStrategy continues to struggle to reclaim its 50-week moving average here. Maybe a rally from Bitcoin can drag MicroStrategy higher and save its price structure, but I believe it's very unlikely we see new highs for MicroStrategy this cycle. MicroStrategy's Bitcoin purchases are getting smaller and smaller as it's getting harder and harder to issue new shares to buy Bitcoin. Their most recent purchases are 1% of the size that we were seeing in late 2024 and in early 2025, but it's nice to see that they're still slowly taking supply off the market. We're seeing something similar from other Bitcoin corporate treasuries like Metanet. Their stock continues to perform terribly, but they're slowly absorbing Bitcoin supply off the market, which is good for Bitcoin.
And that brings us to Ethereum. Clean false breakdown below 4,000. Similar to the clean false breakout above 4,800, everybody piled into the false breakout and so many investors panic sold the false breakdown. And this is the exact type of consolidation you would expect before continuation and price discovery. Tom Lee continues to do a great job marketing Ethereum, similar to what Sailor did with Bitcoin, telling investors that it's trading at a discount right now because future adoption of Ethereum by Wall Street and AI companies will drive it higher. And Bitmine is putting its money where its mouth is because just last week they bought another billion dollars worth of Ethereum, taking more supply off the market.
I think the bull case for Ethereum is very easy for investors to wrap their heads around right now. We have corporate treasuries absorbing a ton of supply. We also have huge stablecoin growth with $46 billion in new issuance in Q3, dwarfing the $10 billion we saw in Q2. And what do you know, 60% of stablecoins are on Ethereum. And we also have quite a bit of institutional demand coming in via these spot ETFs. And it's clear that a lot of attention and brand recognition happens with Ethereum because it is the second largest asset after Bitcoin. So the base case remains that this is just a cool-off period for Ethereum against Bitcoin before it continues higher. Ethereum Bitcoin breaking higher would likely also increase investor appetite and help altcoins.
We also know that October is ETF month because we have so many altcoin ETFs with a final deadline in mid-October and they're very likely going to get approved. And in my opinion, the best positioned altcoin continues to be Solana. Very strong uptrend ever since the tariff low. Violent backtest of our previous range high with a false breakdown and it looks like it wants to head higher from here. You can also see that in last week's flows. You had Bitcoin with some outflows, Ethereum with some outflows, and Solana by far with the most inflows bringing in triple what XRP brought in. Even though Solana has almost half the market cap that XRP does, and that is not surprising because we see a lot of demand for Solana on the CME futures open interest. This is very similar to what we saw for Bitcoin before Bitcoin's ETF went live. And no other chain comes close in terms of users and transactions. 14 million active addresses, 400 million transactions. And even if you think these transactions are fake or bots, just the fact that this chain is able to process that many transactions in a 7-day period is nothing we've really seen a blockchain before it be able to do. So I remain bullish on Solana against Bitcoin. I do believe we hold the 50 and 200-day moving averages here and head higher. And I do believe Ethereum and Solana will flip Bitcoin on a one-year rolling performance basis, which is exactly what we want to see from our assets that are further out on the risk curve.
And that brings us to macro. As we said earlier, the GLI is making me quite optimistic for October and November. Maybe there's some chop before that, but I do expect Bitcoin to break higher. And as we get more into the month, we'll see what's going to come next for Bitcoin, and whether the global liquidity index is going to continue its uptrend or break down lower. A lot of that is going to depend on what we see for the US dollar index, which continues to go sideways in a range here. I don't think it's going to make any big difference to the GLI until it breaks up or breaks down. We're still expecting four rate cuts over the next 12 months. This is what the current market projection looks like, but I expect us to see more rate cuts than that. And what's most important to me is that we see this continued macro breakout in the global liquidity index. You already see the S&P 500 pricing it in. And I believe it's only a matter of time before Bitcoin follows through.
We have seen the same pattern over and over again of the S&P 500 bottoming and rallying first and everybody complaining that Bitcoin is underperforming and why are we even buying Bitcoin because the S&P 500 is lower risk. We saw the same thing in 2023, same thing in 2024 multiple times, and we're seeing the same thing now. Every time Bitcoin lags a bit, everybody starts complaining and whining, saying that Bitcoin sucks, ignoring the fact that Bitcoin is up 650% off the November 2022 low. And the S&P 500 is up maybe 80% during that same time frame. And I believe it's only a matter of time before Bitcoin plays catch-up like it has done over and over and over again this cycle. And we see something very similar from other hard assets like gold, which has been rising recently as well. And although I know many people are making this comparison and saying Bitcoin follows gold with a lag. What this chart actually shows is that Bitcoin leads gold, which makes a lot of sense because Bitcoin is the smaller, faster moving $2 trillion asset, and gold is the old, slow-moving $22 trillion asset.
So, we'll see what happens. But this Friday, we'll be receiving an update to the unemployment rate, the Fed's preferred measure of employment. We know the labor market has been weakening recently, and that's why the Fed is continuing rate cuts. But we're not seeing a big collapse quite yet in things like continuing jobless claims, our proxy for the number of unemployed people in the US or initial jobless claims, our proxy for the number of layoffs. We know inflation is a bit elevated, but as long as it's below 3%, I believe the Fed is going to continue with rate cuts and we have GDP still quite positive with real GDP at 2.1% for Q2 and forecasted to be 3.9% for Q3. So, I don't see a recession on the horizon anytime soon. And although the Fed hasn't announced an end to QT quite yet, we have seen their balance sheet flatline here. So, we'll see how that develops over the next few weeks and months. But, as we look forward, the federal government is still running huge deficits. That trend seems to be worsening year after year. Exponential debt growth means exponential money supply growth as the fiat currency gets debased. And that provides a strong tailwind for our popular risk assets like the S&P 500 and fixed supply risk assets like Bitcoin.
But as always, let me know what you expect. Thank you so much for the support on the recent videos. Thank you so much for watching and I'll talk to you.