While we hope you enjoyed downtime during the holiday season and a lazy warm January, markets were buzzing with news and excitement. Crypto markets experienced multiple significant waves as massive players entered the market. We bring you another packed Rake Review to fill you in on the important and interesting developments.

Inflation numbers out of Australia showed official inflation (CPI) at a relatively low 4.1% down from over 5% last quarter. The quarterly increase was the smallest in almost 2 years. 

Why is this important? Well, everyone is closely following inflation numbers to see if the RBA will be likely to end its record breaking tightening policy and start lowering interest rates. Home owners (Variable Mortgage holders) are hurting from the quick rise in rates over the last year especially and this is starting to bite in the real economy.

If the loosening begins, we may see very bullish conditions for asset prices. Property could rise for the first time since rates started to bite and equities are already on a bullish path. However, Bitcoin and the wider crypto market could be the biggest winners. There are many reasons for this view. Firstly, Bitcoin's higher volatility pays dividends in a bullish and low interest rate environment (not literally). Secondly, Bitcoin could be a winner because this will coincide with the bullish part of the Bitcoin cycle. Bitcoin is already on a winning path with the halving approaching and the US Spot ETF's approved. Adding in to the mix improved homeowner cashflow and we could see a Bull Run for the ages!

In terms of Market Cycles, we are heading to the juicy part of the cycle where the biggest profits are made. If history is a guide, Bitcoin is heading towards the Hope & Optimism stage this year and possibly complete Thrill and Euphoria in 2025. Now History is just a guide and this time could be different but the exact same conditions exist. A whole new wave of Buying (Demand) is here with ETF's buying in bulk against the backdrop of Bitcoins fixed supply. There will only be 21 Million!

On the first day of trading Bitcoin ETF's saw $4.6 Billion in inflows with Blackrock doing over $1Billion alone.  The below graph shows the ETF inflows by fund. As the ETF's swallow more and more Bitcoin it will become evident that there is not enough to go around and the price will reflect that monumental demand shift.

Everyone has probably heard about the disaster that was FTX in 2022. The exchange went down in metaphorical flames and took with it the whole market leading to sub $17,000 Bitcoin and the absolute panic of November 22. 

It was all caused by FTX's subsidiary trading company Alameda Research losing Billions on the biggest trade of the last Bull market cycle. The GBTC premium trade brought down some huge names that are no longer here. We won't go into it too deeply here but its really the central issue that brought the last bull run to a premature halt. We thought that SBF (Sam Bankman-Fried's) Trial would be the last we heard of that sorry saga however that hope was a tad premature. The great news of the ETF approvals was dampened by the fact that the FTX bankruptcy estate is now finally able to get rid of its GBTC shares and in turn the sale of BTC which pushed the market lower for the biggest DIP we've seen for months.

After a stellar run for Bitcoin and the Alts, Bitcoin dipped in the post ETF approval "Sell the Rumour" phase spurred on by FTX related BTC sales. BTC fell from over $47K to under $39K USD in a fall described by one crypto OG as "What is this a crash for Ants?"

The old heads know that a 15-20% correction on the way up is a healthy consolidation. It was however interesting to see that many were panicking and expecting BTC to fall below $38K USD. It got us thinking about the fear that investors experience being an even more powerful motivator than greed at times.

In the field of behavioural economics there is a concept called "Loss Aversion". This concept states that the emotional and psychological impact of a fall is perceived by investors as more impactful than a gain of the same exact magnitude.

In other words people are irrationally affected by falls more than they should be. It's an interesting concept and we think it played out nicely in January. Here is an asset that is up over 100% even at the very worst of the DIP since November 22. Every investor on this ride should be happy but yet many were fearful. Here is an asset that is heading to a supply shock (The halving) at the exact time of a demand shock (ETF approval) and yet a small fall sees some want to sell.

Well a week on from the worst and BTC has already recovered 10% and Alts are also bouncing. The constant buy pressure from the ETF's is eating up all the cheap BTC from any panicked weak hands.

• Short term pain vs long term gain. FTX/GBTC drawdowns weigh on BTC price in January as ETF demand starts in perpetuity 140,000 BTC was bought in the first 11 days of the ETF's operation.
• In signs that the US economy is over the Banking crisis on 2023 and moving towards a new expansionary cycle of interest rates the Fed Board announced it will be ending the BTFP program propping up the banking system.
  
• Coinbase appeared in court defending itself against the SEC. The SEC has come off significant defeats against its crypto over regulation recently with the largest of those defeats to GBTC. Coinbase is also likely to win with the giant exchange trying to work with regulators without any luck so far.
  
• Dr. Arthur Leffer says “You can have a system that uses #bitcoin as the monetary base”, seemingly endorsing the possibility of major economies being based on BTC. An incredible statement from the "Father of supply-side economics".

In case you wanted to know what the worlds leaders were discussing at Davos January 2024. I guess Covid-19 is no longer an issue.

If you enjoyed this Rake Review, feel free to open an account and gain access to more proprietary research and work with your very own dedicated crypto broker.

In an exciting turn of events, Bitcoin, the world's leading cryptocurrency, has crossed the $30,000 USD threshold yet again. This milestone comes as Bitcoin has only experienced a daily open above $30,000 on a mere 510 occasions out of its entire existence of 5,285 days. This recent surge is believed to be attributed to the involvement of traditional financial players, who have seized the opportunity to secure positions at lower prices amidst regulatory actions taken against prominent cryptocurrency exchanges, such as Binance and Coinbase.

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

Bitcoin's resurgence above the $30,000 mark marks a significant milestone in its volatile history. With less than 10% of its trading days surpassing this level, this achievement demonstrates the growing interest and confidence in Bitcoin as a valuable investment

If you enjoyed this Thunder Trading, feel free to open an account and gain access to more proprietary research and work with your very own dedicated crypto broker.

There are 2 weeks to go until the end of the Financial year in Australia. Are you ready with your tax strategy? We will discuss this later but first we have so much news in such a short period of time. The SEC is going to war with the largest crypto exchanges in the world while declaring more and more currencies as "unregistered securities". What does this mean for the industry, your investments and the next bull run?

Binance had previously already been flagged as the "bad guy" when the CFTC released a detailed dosier alleging that Binance targeted US customers without a licence, traded against their own clients with hidden accounts as well as a raft of other impropriety so it was no surprise when the SEC officially went after them. The biggest exchange in the world is now in damage control with the founder CZ desperately trying to maintain the status quo. CZ has recently been accused of selling BTC to buy BNB (The Binance token) in order to defend the price of it from free falling. If you recall what happened with Sam (SBF)  and FTX this all seems like a perfect mirror image. Needless to say if you have funds on Binance or hold the BNB token please speak to us urgently and work out a plan of action. 

The following day after suing Binance the SEC officially went after Coinbase. This was more of a surprise because Coinbase was seen as a good actor trying to walk the path of full transparency and legitimacy. Under SEC's watch Coinbase listed on the US stock exchange and became the largest custodian of funds including for Greyscale and Blackrock. Brian Armstrong the CEO has been vocal in trying to work with regulators to make sure they could operate by the book. Coinbase had reached an impasse with the SEC recently and threatened to go completely offshore by leaving the US. So, the legal action makes it clear the SEC sees the whole crypto industry as a threat and the announcements took a swipe at several prominent cryptocurrencies. For a full list see here.

The implications are significant for the web3 and crypto industry. Effectively, the current environment makes it impossible for a new coin to be available for sale in the US. Now, given the global nature of cryptocurrencies the US regulators see global issues as US issues. Every founder of a cryptocurrency that has been named as a security may soon find themselves in trouble with the law. Now do you see why Satoshi disappeared? 

As an investor you have to ask yourself: Should I still be holding Cardano or Matic or BNB? What does the future hold? The answer is important. Many of our clients have chosen to consolidate their altcoins into Bitcoin (BTC).

Bitcoin is now at almost 50% dominance again. This means that Bitcoins value is half of all the other (top100) cryptocurrencies put together. The other currencies come and go. They have their time in the sun and then fade into insignificance. The greater fool theory has it that you can make money if the guy you sell to is a greater fool than you are. As the price rises everyone wins until the last guy gets stuck holding a bag of worthless tokens.

Bitcoin is different. It is not a security according to the SEC. It also doesn't have a founder or headquarters that you can send a subpoena to. It can't be sued. It can't be stopped and it can't be controlled by the government or the regulators.  

The Largest Home Loan Bank in Australia CBA has updated its fraud system and set a limit of 10,000 per calendar month for deposits to crypto exchanges as well as a compulsory 24 hr block. It's the kind of overreach we haven't seen yet from banks in Australia. Is there more to come? Either way, as we always say, deposits to Stormrake should never say "crypto" or "BTC". Please only use your customer ID as the reference and no description. We have never had a problem and we'd like to avoid any issues in the future. For now we have full complete access to all our Banks and can fully service all AUD needs. If anyone has a banking issue please let us know.

Meanwhile the Australian Bitcoin Industry Body has officially replied to the CBA:

As Financial Year 2023 draws to a close, we remind all clients to have a think about their positions. Note that we do not provide financial advice and we are not tax experts or accountants. However, there is only 2 weeks left in the financial year for any trades to count towards FY23. Speak to your accountants as to what is best for your tax position and let us know if you need to transact.

As the year draws to a close Stormrake will charge the accrued custody fees for all accounts holding crypto. Look out for that in your next statement which will detail any charges.

• SEC files lawsuits against Binance and Coinbase on consecutive days. These are the 2 largest centralised exchanges in the world. Coinbase especially was trying to be a fully regulated exchange and listed in the US under the watch of the SEC. The SEC also declared a new list of cryptocurrencies as securities. Full list here: Contact your broker if you have these tokens.
  
• Commonwealth Bank announces all withdrawals to crypto exchanges will be held for 24hrs to protect their clients from fraud.
  
• BlackRock files for a Bitcoin only Spot ETF (Technically a trust) in a complete 180 after calling Bitcoin an "Index of Money Laundering" in 2013. BlackRock is the worlds biggest fund manager.
  
• The RBA raises rates again by 0.25% but the Fed decides to halt for the first time since the record tightening began.
  

During the week we wrote an education piece on the way that SEC looks at what is and isn't a security. The Howie Test is used to decide and if a cryptocurrency is a security it needs to fully comply with securities law in the US. Bitcoin is not a security and never was. The article here looks at this in more detail.

Many people think confiscation is impossible in the western world but studying history allows us to see that confiscations have happened before and there is a chance of confiscations in the future. The article here looks at what happened in more detail.

If you enjoyed this Rake Review, feel free to open an account and gain access to more proprietary research and work with your very own dedicated crypto broker.