Transcription
Welcome back to my 10 favorite people. Hope you're doing well.
I'm incredibly excited for today's video because the Global Liquidity Index has done it once again. It warned us about mid-September to mid-October and now Bitcoin seems to be following through. But I'm not that concerned with this short-term pullback into perhaps mid-October. I'm mainly looking forward to what seems to be coming next in Q4.
And it's amazing how much pushback I still receive regarding this indicator, even though it continues to serve us well over and over again. Is it perfect? No. But has it been doing a great job of giving us an idea of trend? It definitely has. And if the US dollar index continues to show this much weakness and rolls over here immediately or gets a short-term bounce before rolling over, that's going to put upward pressure on global liquidity and risk assets.
As of right now, the market is still pricing in 125 basis point rate cut in October and another one in December and then a pause after that. This is what those rate cuts would look like in terms of the current projections by the market. But the biggest catalyst for markets in terms of the Federal Reserve is not how many rate cuts we're going to be seeing in Q4 or early 2026. It's who is going to be the next Fed chair and are they going to be significantly more dovish than Powell.
And it's hard for me to be concerned about a major Bitcoin cycle top here because we're still in the midst of a macro breakout for the global liquidity index, similar to the one we saw in 2020 and in 2016.
And now, what am I doing with my portfolio to position for this? Believe it or not, no changes were made to my portfolio this week. Even though so many people are screaming for a cycle top and so many people are getting liquidated on leverage and panicking, I didn't make any changes to my portfolio this week because I still have plenty of upside spot exposure in case we do rally higher. But I have been taking small profits along the way to keep me calm and collected during these corrections and give me some dry powder to buy the dip, which I will likely do on Monday.
And it's crazy to think that just last week in the free weekly report published on September 15th, I talked about how I took some profits on my Solana position that morning and that because it had had quite a nice rally recently, it was very difficult to do, but how sticking to my portfolio system has not failed me yet this cycle. And what do you know? The morning of September 15th is right here when Solana was trading at $240. And now I can buy back almost 20% more Solana than I sold. And I didn't take those profits because I thought the top is in and we had to go lower. I still expect new all-time highs for Solana. But taking those small profits allow me to be calm and collect when we see these corrections and maybe even take advantage of them when everybody else is panicking.
And the same thing happened with Ethereum. Roughly four weeks ago on the free weekly report published on August 25th, I talked about how I rotated a good amount of profits from Ethereum holdings into Bitcoin. It was incredibly difficult to do because Ethereum was the darling of the market at the time. Tom Lee was calling for 60K Ethereum and anybody who was taking profits was an idiot according to Twitter and YouTube comments. But what do you know? Here is where Ethereum was trading on August 25th around 4700. And just a few weeks later, it's now at a 20% discount roughly. And I got to manage my risk while also having that dry powder now to buy back the Ethereum that I sold as well as even more Ethereum with that money that I rotated into Bitcoin, which is easier to visualize here on the Bitcoin pair. Ever since hitting our major pivot level, Ethereum is down about 17% against Bitcoin. So now I can easily rotate that back or use some of the cash on the sidelines to buy the dip.
And that's why I have chosen this approach for my third cycle in this market. Would I outperform if I was always 100% exposed? Of course. But the peace of mind and risk management that you get from having some dry powder on the sidelines and taking some profits really helps navigate the cycle in my opinion.
And as always, if you'd like to learn more about my portfolio automation system or mental models I use to navigate this market 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, the S&P 500 is still looking very solid. Maybe we get some brief mean reversion to cool off after the incredible rally we've seen since April, but I still believe the S&P 500 has higher to go, and that should be great for Bitcoin and other risk assets. We know the labor market is slowly weakening according to the unemployment rate, but based on what we're seeing with initial jobless claims and layoffs, it is not falling off a cliff, and I don't see any major signs of recession quite yet. Similar thing with continuing jobless claims. It is slowly increasing, but we're nowhere near recession levels yet. And inflation is still elevated, but it's low enough that it's giving the Fed room to ease. We did receive an update to PCE this week, the Fed's preferred measure of inflation, and it went up ever so slightly by about .1%. Same thing with core PCE. It was almost flat. And that's exactly what you want to see if the Fed is going to continue cutting rates and continue to prioritize the labor market. And they're doing that while GDP is still positive. Q2 was actually revised up from 2% to 2.1% for real GDP. And as of right now, the Atlanta Fed's estimate for Q3 is almost 4% real GDP, which is pretty insane. And we know the Fed hasn't even ended quantitative tightening and gone to quantitative easing and expanding their balance sheet yet, which we know they're going to have to do eventually. So, I really like the medium to long-term for risk assets. Maybe there's some short-term pain, but I do think the future is bright for Bitcoin.
And speaking of Bitcoin, definitely not the best weekly chart I've ever seen. It looks like it's going to close below the 20-week moving average unless they're able to save it by tomorrow, which means our next target would be the 50-week EMA, which is why I have this area marked out as possible. If we lose the 20-week EMA, we probably head to the 50-week EMA. And I wouldn't be surprised if everybody starts calling for a head and shoulders, everybody's favorite pattern, just to watch Bitcoin hold the 50-week EMA and re-enter price discovery in Q4. But we're going to have to continue taking things one week at a time.
And I completely understand why so many investors are so fearful right now. As a matter of fact, we're seeing the most fear since Bitcoin was trading at 83K back in April, which is pretty insane with Bitcoin trading at almost $110,000 today. And we're also seeing that investor fear reflected in the spot ETF outflows as well. But this is exactly what you expect in a correction. Many investors are panicking and selling because of the downside and because of all of the calls for a cycle top on Twitter and YouTube as well as all of the fractals. But I believe investors are missing the fact that 2025 has been completely different from 2021. Especially if you look at froth and euphoria in the altcoin market. This has been a very slow and steady year for Bitcoin where it rallies, cools off, rallies, cools off. So, I don't think it's fair to compare 2025 to 2021 solely based on the price action. And I don't expect anywhere near the downside we saw after 2021.
And I like to keep things very simple. I expect support to hold until it doesn't. I don't like to jump to conclusions. And if we are to lose the range high at 109,000, I would then move my target to 100K, which is that major psychological level and the 50-week moving average. And that's exactly why this week's free weekly report was called the trend is your friend. It's been very easy this cycle to just be patient and watch Bitcoin rally, cool off to the 50-week EMA, rally, cool off to the 50-week EMA, rally, cool off to the 50-week EMA. We rallied once again, maybe we're cooling off to the 50-week EMA. Maybe we don't even have to go that low. But if you just keep it simple and let price action speak for itself, you don't have to be panic selling every local bottom and FOMOing in at every local top because of narratives and sentiment.
I would personally not bet against October seasonality. It tends to be a very good month for Bitcoin. And if we take a look at the 10-year average for Bitcoin, you can see it tends to be weak in late September, early October. But in about mid-October, it starts to rally into Q4, which funny enough is exactly what the global liquidity index is telling us Bitcoin is most likely going to do. So, we have some nice confluence there. So, for me, I'm still expecting that local bottom sometime soon and then a rally into Q4. Could it take a lot longer and be very choppy like what we saw in 2024 and a rally into 2026? Maybe. I'm open to both outcomes and positioned for both, but I still believe it's going to be a quick bottom in early October and a rally into the remainder of Q4 in terms of my base case as of right now.
And if you think it's been difficult to hold Bitcoin, holding corporate proxies have been so much worse. For example, Bitcoin is up about 30% since the April low. And MicroStrategy is actually down 3% since April as we continue to watch that MNAV premium compress. And we have MicroStrategy looking quite weak below its 50-week moving average as investors start to be more and more concerned with that premium compressing and getting closer and closer to one. So I would really like to see some strength come back into MicroStrategy, but that might require Bitcoin making a recovery first.
And as for our ranges, we are back to retesting the previous range high at 109K. Would love to see this hold. If it does break, we will have to reassess. But I don't like to update this chart until we get confirmation with a weekly close.
And speaking of waiting for a weekly close, we had Ethereum briefly trade below 4K this week, but it's trading back above it right now. We really want to see it close above that level. I would also love to buy the dip on Monday when I usually make changes to my portfolio. As of right now, Ethereum looks quite oversold with the lowest 4-hour RSI reading since the April low at 1.4K during all of the tariff drama. At the very least, I would expect a bounce from this level. Could it go a little bit lower after that? Of course, but I still believe Ethereum has higher to go this cycle. We are seeing some ETF outflows as investors take profits and lock in gains or maybe even panic sell this correction because they FOMO bought at the top. But I still think Ethereum has higher to go after this cool-off. And let's not forget that these corporate treasuries are still slowly accumulating Ethereum. And I do believe we have more upside to look forward to once this correction is complete. Especially because we saw this correction coming at this major pivot level and 100K moving average, which has been a major swing pivot for Ethereum over and over again over the past 5 years. So investors taking some profits maybe back into Bitcoin at that level is not surprising. And I do expect it to break back above it soon and head towards our target at the 0.5 Fibonacci level.
As for the rest of the altcoin market, the alt season index has cooled off a bit back to 71. We saw a great move from many altcoins in Q3. I know your bags didn't 10x like you were promised by many influencers, but we did see major outperformance from most sectors against Bitcoin. And of course, the one that outshined the most was Ethereum with a 101% return compared to Bitcoin's only 15%. But just like every other mini alt season we've had this cycle, investors started going way too crazy with the leverage and risk-taking in the altcoin market. Altcoin open interest got way above Bitcoin open interest when usually they're a bit more in line. You can see the same thing happen in December 2024. And market makers do not let these altcoin traders have a free ride just because they're buying in anticipation of Fed rate cuts or good seasonality in Q4. There's always a big washout before the big move actually happens. And that's what I believe we're experiencing right now.
And you see it very clearly in Solana. Just 2 weeks ago, everybody loved Solana and we were so excited about the ETFs around the corner. We were so excited about the corporate treasuries and everybody was ready for $400 Solana immediately. But you get that big leverage washout to wreck everybody aggressively backtest the range high and then hopefully continue its move higher. I don't know what the exact path is going to be, but I'm very comfortable holding Solana for the remainder of Q4 and I do plan to buy the dip on Monday. We know we have ETFs coming in October. We know that a lot of those ETFs might even be staking ETFs and a Solana ETF paying a 7% yield to investors would likely be very exciting and popular.
And I really like this visualization from Panta Capital comparing Bitcoin, Ethereum, and Solana. What I consider to be the big three assets in this asset class. Bitcoin got its ETF first. It has 43 ETFs and 165 public companies holding it. And then about 6 months after Ethereum got its ETF, it has 21 and it has 16 public companies holding. And as I've been saying for months now, I do believe Solana is next in line. It's a very well-known brand in the US. It has a ton of users and applications built off of it. Even with all of the hate that it gets, and it's getting its ETFs next month, and as of right now, it has five public companies holding Solana on their balance sheet. And it's nice to see a bit of a sentiment reset. When Solana was rallying, there was a 60% likelihood of it making a new high by the end of 2025. According to Poly Market. Now with this correction, it has cooled off back to 40%. And that's exactly what you want to see after the market gets a bit too overheated. And if we look at the RSI on Solana for the 4-hour, every time we've gotten this low, we've had a local bottom at the very least. And four of the past five have been major local bottoms. And we're retesting that upward trend, giving me even more confluence to be happy to buy the dip on Monday.
And let's not forget that all of these Solana treasuries only went live maybe 2 weeks at most 3 weeks ago. So all of this is still quite new. I know it feels like this happened a year ago and we've completely moved on and now we're concerned about completely different things. But these things take time to play out and I know that sometimes when there's so much drama and so many cycle top calls, it can feel like everything is taking forever. But it's amazing how far Bitcoin, Ethereum, and Solana have even come just in 2025 so far. And now that Solana has bounced off its 200-week moving average on its Bitcoin pair, I would love to see a reclaim of the range low ASAP so that we can see continued outperformance from Solana now that we're seeing a bit of a cool-off across all of these assets. I do believe this is going to be a cool-off before our next move higher. If you're bullish, you call this. If you're bearish, you would call this cope. But in my opinion, I think we're going to have a good Q4. Seasonality says so. And the global liquidity index, which continues to serve us so well, says so.
Also, and just to be clear, I'm not going to be waiting for October 11th or 12th to go all-in. I'm going to happily buy the dip during this correction in anticipation of a rally because I don't expect the exact days to line up perfectly. Maybe you like a 77-day lag, maybe you like a 82-day lag. You can pick whatever number you want. What's important to me is that Bitcoin has been following the global liquidity index with a roughly two to three month lag, which gives us a great general indication of trend.
And speaking of trend, as we look forward, the federal government is still running huge deficits. That's a trend that continues to get worse and worse each year. Exponential debt growth means exponential money supply growth and currency debasement, which is good for risk assets we price in the fiat currency like the S&P 500 and especially good for 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.