Stormrake - Insights #November Bitcoin

The Rake Review: December

Fri, 20 Dec 2024 17:55:40 +1100

A Year in Review

Our Christmas gift to you, an early Rake Review as well as a Christmas promotion. Read more to find out...

An Incredibly Volatile Month

December has been an exceptionally volatile month, featuring two major liquidation events, four new all-time highs, and an interest rate cut followed by a press conference from Jerome Powell that rattled global markets. But most importantly, Bitcoin hit $100,000 USD.

With less than three weeks of the month gone, the hope is that the Christmas period will stabilise the market and set Bitcoin up for another rally.

The month began with significant turbulence. December 5, the day Bitcoin hit $100k was also the same day Bitcoin experienced one of the largest liquidation events in recent history, plunging from a high of $104,000 to a low of $90,500—a 15% range in a single day. This resulted in $1.1 billion in leveraged positions being liquidated, marking the largest day for liquidations since August. The chaos escalated further on December 9th, with another liquidation event surpassing the first. Bitcoin corrected sharply from $101,200 to $94,100, wiping out $1.7 billion in leveraged positions in a single day. To put this in perspective, this liquidation volume exceeded that of the FTX collapse in late 2022.

Despite these setbacks, Bitcoin rebounded strongly. Finding support at the 25-day exponential moving average, it surged to new all-time highs for three consecutive days. The bullish momentum was a relief for Bitcoin investors, as the asset once again outperformed the broader market. Bitcoin dominance climbed, while many altcoins struggled to keep up. Notable exceptions included Ondo and Sui, which also set new highs. With an interest rate cut on the horizon and the historical "Santa Claus Rally" adding seasonal optimism, conditions appeared favorable for Bitcoin.

However, Jerome Powell’s post-rate-cut press conference shifted the tone. While the Federal Reserve delivered the anticipated interest rate cut, Powell’s remarks struck a hawkish note. Key takeaways included:

Persistent inflation remains a concern.
Projections for five interest rate cuts in 2025 were revised down to two.
The Fed plans to adopt a cautious approach to future cuts.
Uncertainty surrounds Trump’s upcoming policies.
The Federal Reserve reaffirmed its policy prohibiting Bitcoin holdings, with no plans to change this stance.

The market’s reaction was swift and severe:

The US dollar surged to a two-year high.
US stock markets shed $1.5 trillion in value.
Gold and silver dropped 2% and 5%, respectively.
Bitcoin fell over 4%, briefly dipping below $100,000.
Most altcoins suffered declines of over 10%.

All this unfolded within the first three weeks of December, leaving plenty of room for additional surprises in the remaining days. Historically, the Christmas period has been bullish for Bitcoin, and we remain optimistic about a positive close to the year.

As always, our long-term bullish outlook on Bitcoin is unwavering. Corrections should be viewed as opportunities to buy the dip, accumulate Bitcoin, and invest in high-potential altcoins at discounted prices. This strategy has consistently proven to be a formula for success.

What’s Next for Bitcoin in January?

January 2025 is shaping up to be a pivotal month for global markets, with events that could set the tone for the next four years. Most notably, Donald Trump’s inauguration on January 20th is expected to have a significant impact, particularly on Bitcoin.

The anticipated implementation of the Strategic Bitcoin Reserve shortly after the inauguration is likely to drive unprecedented demand from the US Government. This move could trigger a domino effect, as other nations may act preemptively by purchasing Bitcoin for their own reserves. Currently, many countries already hold Bitcoin:

El Salvador has been actively buying.
China and the UK have acquired Bitcoin through seizures.
Countries such as Bhutan, Saudi Arabia, UAE, and Qatar are mining or rumored to be accumulating Bitcoin.

There is increasing speculation that sovereign Bitcoin purchases by Middle Eastern nations could intensify. Once the US government begins its acquisitions, other major countries are likely to follow, potentially igniting a global race to lead in the crypto space.

Before Trump's inauguration, FTX, the collapsed exchange, is set to begin repayments starting January 3rd. The first batch of customers will receive compensation in USDT or USDC. It is highly likely that a significant portion of these funds will stay within the crypto ecosystem, flowing into assets like Bitcoin, Ethereum, and other altcoins. This development serves as another bullish catalyst to kick off the year on a strong note.

From a market cycle perspective, January is still early in the bull run. Bitcoin remains dominant, with Bitcoin dominance flipping bullish as Ethereum and other altcoins struggle to consistently outperform. This aligns with phase one of the bull market cycle, where Bitcoin historically leads the charge.

The trajectory for January will depend heavily on how December concludes. Two scenarios stand out:

Bullish Close to December: If Bitcoin reclaims its short- and medium-term bullish structure and trades back above $100,000, further all-time highs in the $110,000–$120,000 range are likely in January.
Bearish Close to December: A deeper correction could see Bitcoin trading closer to $75,000 as we enter the new year.

Barring any black swan events or unforeseen developments in December, the long-term outlook for Bitcoin remains firmly bullish. Deeper corrections should be embraced as opportunities to strengthen Bitcoin positions and accumulate strong altcoins at discounted prices.

A Timeline of Key Events that Shaped Bitcoin

A clearer view of the chart above can be found here: https://www.tradingview.com/x/ve1vEvwc/

Opening the Year Strong at $42,200
ETF launch Jan 11 ($46.6k)

All time high March 14 ($73.8k)

Bitcoin halving April 20 ($64.4k)

8 month consolidation (Between $50-$70k)

Mt Gox Repayments, German Government and US DOJ mass selling of BTC

Early July ($53.4k low)

Trump’s speech at Bitcoin 2024 29 July ($70k)

Yen carry trade 5 August ($49k low)

Jackson Hole Symposium 26 August ($65k)

Dovish Jerome Powell saw risk on assets rally

First Trump Assassination - Trump Pump

Marked the low at $52.5k and rallied to $67k in three weeks,

October - ‘Uptober’

US Election; Trump wins, ATH arrives November

Further momentum

$100k Dec

Powell hawkish speech sub 100k

2025; Time for the Real Bull Market

2025 is shaping up to be a landmark year for Bitcoin and the broader crypto market. Based on the timing of this bull cycle, we expect the peak to occur later in the year. As highlighted earlier, we are still in the early stages of the bull market, with a blow-off top and full-scale altseason yet to unfold.

One of the most anticipated events is Trump’s inauguration in January, which is expected to initiate the Bitcoin Strategic Reserve shortly thereafter. This policy will see the US Government purchase 200,000 Bitcoin using existing funds, creating an unprecedented surge in demand. Such institutional buying pressure will likely trigger a historic rally. For a detailed analysis of the Bitcoin Strategic Reserve, refer to our previous Rake Review article.

While we are deeply bullish on Bitcoin—it should be the cornerstone of any crypto portfolio—we’ve also identified several altcoins with the potential to lead the market during the altseason. Many of these have already delivered impressive returns, as covered in our daily Morning Notes and Thunder Trading articles. However, with the bull cycle still in its early phase, these coins have significant upside left. Among our favorites are SUI, ONDO, SOL, and FTM, to name a few. For the complete list, reach out to your Stormrake Broker.

A key metric we use to assess market positioning is the MVRV Z-score (Market Value to Realized Value). This indicator compares Bitcoin’s market value (black line) to its realized value (blue line), with the Z-score (orange line) highlighting standard deviations between the two. Historically, the Z-score’s green band signals market bottoms, while the red band signals tops. Currently, the Z-score remains in the lower half of the chart, far from the red band. This strongly suggests that the peak of this bull cycle is still a long way off.

Finally, it’s essential to emphasise that there is never a bad time to buy Bitcoin. Over its lifetime, Bitcoin has proven to be one of the best-performing assets, with every holder who kept their Bitcoin for four years or more always ending up in profit. A common mistake among investors is attempting to time the market and overtrading. The reality is that time in the market always beats timing the market. Instead of waiting for a dip that may never come, it’s better to accumulate Bitcoin consistently.

This advice is especially relevant as Bitcoin nears all-time highs—its price tag can be intimidating, but sitting on the sidelines often leads to missed opportunities. To delve deeper into how overtrading can lead to underperformance, check out our detailed Thunder Trading article here.

Market Update

Here is the fast five of what you need to know about the market in December 2024:

Bitcoin is currently up 0.60% from the open…
XRP reaches 4th in overall market cap after being 3rd for a brief time
Cardano jumps Lido Staked Ether to move into 9th
Solana falls from 4th to 6th largest crypto
ISO tokens continue to be the dominant category, HBAR, XRP, ALGO and XLM leading.

Video of the month

A snippet from Jerome Powell's Hawkish Speech

Bitcoin and Ethereum ETF Performance:

All throughout December the net flow of money in Bitcoin and Ethereum has remained positive for every consecutive day. This exemplifies the positive market sentiment about the new securitisation of digital products on established exchanges.

Stormrake Morning Notes and Thunder Trading Hits

One of the standout achievements of the year has been the revival of our Morning Notes and Thunder Trading articles. These research pieces have provided clients with invaluable insights into the markets, particularly crypto projects we identified as undervalued.

Clients can tailor their engagement by opting to receive just the Rake Review, Morning Notes, Thunder Trading, or a customised combination of these updates, this can be done by clicking HERE.

Morning Note (DAILY PUBLICATIONS)

Our Morning Notes are concise, 3–5-minute reads delivered to subscribers six days a week. Each note includes:

Daily Market Analysis: A snapshot of market movements and relevant events impacting short-term prices.
Stormrake Spotlight: A feature on a specific coin or project we believe to be undervalued. These picks have consistently yielded impressive returns for those who followed.
Short-Term Bitcoin and Ethereum Analysis: A technical overview of key price levels and trends to watch.

Thunder Trading (TOPICAL PUBLICATIONS)

Thunder Trading articles dive deeper, offering in-depth research on specific projects, migrations, or significant events affecting the market. Some of our most notable Thunder Trading pieces this year include:

The Yen Carry Trade and its market impact.
The Mt. Gox repayments and mass Bitcoin sell-offs by the US DOJ and German government.
The introduction of Ethereum ETFs.
Educational insights, such as overtrading and its impact on underperformance.
A project-focused deep dive on Sui, which was a major hit with clients.

The Sui article was particularly well-received. Subscribers who followed our analysis were able to purchase Sui at prices below $2. With its recent all-time high just under $5, the project continues to show potential for further rallies. For a comprehensive look at why we remain bullish on Sui, read the full article.

To explore our published Thunder Trading articles, click here, and to stay ahead of future editions, make sure to opt-in and subscribe.

Majority coins in the Stormrake Spotlight have been quite successful, below is a full list of coins that have featured in the Stormrake Spotlight and their performance since featuring.

**figures at time of writing 19/12/2024*

Since launching the Stormrake Spotlight in September, 13 coins have been featured, each delivering peak returns of at least 15% above their initial mention. Notably, eight of these coins remain comfortably in profit.

Top Performers

Five coins (FTM, SUI, GOAT, DOGE, ONDO) have achieved returns well over 100% since being featured.
Four of these still remain above 100% from their first mention.
WIF and SOL narrowly missed the 100% milestone, peaking at 97% and 92%, respectively.
ETH and TAO peaked at 55% and 73%, respectively, meaning nine of the 13 coins have delivered over 50% returns.

To ensure you don’t miss out on future opportunities and the exceptional returns from Stormrake Spotlight, subscribe to the Morning Notes on Substack here. SUBSCRIBE

STORMRAKE'S CHRISTMAS GIFT TO YOU

Thank You for an Incredible Year!

As the year comes to a close, we want to express our gratitude for being a valued part of our community. Your trust and support have made 2024 an amazing year, and we’re excited to help you achieve even greater milestones in the year ahead.

As a token of our thanks, we’re giving you a special end-of-year bonus:

For every AUD$10,000 worth of Bitcoin you purchase with Stormrake, we’ll gift you AUD$20 worth of Bitcoin.

It’s our way of saying thanks for choosing us as your trusted partner in crypto.

This exclusive offer is available until December 31, 2024, so don’t miss out!

Terms & Conditions

This promotion is valid from December 21, 2024 to December 31, 2024, 11:59 PM (AEST).
Bonus Bitcoin is awarded at a rate of AUD$20 for every AUD$10,000 worth of Bitcoin purchased in a single transaction.
Bonus Bitcoin will be credited to your account as part of the qualifying transaction.
Transactions canceled or refunded will not qualify for the bonus.
Standard trading fees apply.
We reserve the right to amend or withdraw this promotion at any time without prior notice.

Written by Alexandar Artis

Memes of the month

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No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

Disclaimer

All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.

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The Rake Review: November

Sat, 30 Nov 2024 18:07:22 +1100

November was one for the Record Books

Bitcoin hit multiple all-time highs in November, nearing $100K, with bullish momentum setting the stage for a promising December.

Bitcoins Biggest Monthly Increase in History

November witnessed the largest dollar value increase ever for Bitcoin. At the time of writing, Bitcoin is up 37% and less than 3% away from the monumental $100,000 mark. It felt as though new all-time highs were being set every other day. November was undoubtedly a thrilling month for Bitcoin bulls, but it didn’t start that way.

Bitcoin began November at $70,000 but faced a decline leading up to the U.S. election on November 7, reaching a low of $66,800 on November 6. Market sentiment suggested that a Kamala Harris victory might lead to a further pullback, whereas a Donald Trump win was expected to boost Bitcoin in the short term. As swing states turned red, markets rallied, with Bitcoin hitting a new all-time high of $76,400 on election day. Once Trump’s victory was confirmed, the “Trump Pump” began. While bullish sentiment existed regardless of the outcome, it’s clear that the market’s reaction wouldn’t have been the same under a Harris administration.

The rally persisted for three weeks, with Bitcoin setting new highs almost daily and leaving pullback watchers behind. Bitcoin came within $400 of the $100,000 milestone. Despite many calls for corrections starting at $75,000, the largest pullback during this rally was a mere 5%.

A long-overdue pullback did occur, albeit quicker and milder than expected. Bitcoin fell approximately 9% from its high, reaching $90,800. Many anticipated a larger drop below $90,000, but proactive dip buyers were rewarded as Bitcoin rebounded, rising over 7% from the low and setting the stage for a promising December.

What’s Next for Bitcoin in December?

The recovery has re-established bullish momentum, making December a strong contender for reaching $100,000 Bitcoin. This could pave the way for further rallies to $110,000 or even $120,000 before Christmas. An anticipated interest rate cut and the traditional "Santa Claus rally" make Bitcoin’s trajectory highly promising. Remember, “time in the market beats timing the market."

Is Alt Season Upon Us?

In traditional bull market fashion, Bitcoin’s rally lifted the rest of the market, with altcoins delivering impressive returns. Several narratives shaped the altcoin space over the last three weeks:

Week 1: Memecoins dominated, with Dogecoin leading the charge, rallying nearly 300% to $0.44 after being featured in Stormrake Spotlight. This was followed by other memecoins like Pepe, WIF, SHIB, and PNUT, all hitting new all-time highs. Memecoin volumes reached levels seen only four times since 2021, often a cautionary signal as they have historically preceded Bitcoin peaks. However, this bull run is unlike any before.

Week 2: ISO coins like Ripple (XRP) and Stellar (XLM), along with dino coins like Cardano (ADA) and VeChain (VET), took the spotlight.

Week 3: Gaming tokens such as Sandbox (SAND), Decentraland (MANA), and Gala Games (GALA) led the way before Ethereum and its ecosystem took charge. Ethereum’s leadership raises questions about whether phase one of the bull market is nearing completion.

A usual crypto bull market is made up of four phases as outlined above. Bitcoin’s massive price surges over the last few months have made it undeniable that we are currently in phase one of the bull market. This has resulted in Bitcoin dominance rallying alongside its price. There are two key metrics to monitor for identifying the end of phase one: ETH/BTC and Bitcoin dominance.

Bitcoin dominance is not directly correlated with Bitcoin’s price—it can decline even as Bitcoin rallies. For instance, dominance peaked on November 21 and began to fall while Bitcoin reached a new all-time high on November 22. During the first phase, money flows into Bitcoin, increasing both price and dominance. Once dominance peaks and starts to decline, phase one is likely nearing its end. Currently, Bitcoin dominance is at 58.30%, down 5.25% from its peak of 61.53%.

The ETH/BTC performance is another crucial indicator. Phase two involves Ethereum leading the market, confirmed when Ethereum consistently outperforms Bitcoin. Presently, Ethereum and Bitcoin are alternating in outperformance, indicating an overlap between phases one and two.

Both metrics suggest we are transitioning between phases one and two. What about altseason? Altseason is the final phase of a bull market and typically lasts a few months. It occurs when Bitcoin dominance plummets below 40%. For now, we still have some distance to cover before entering altseason.

Strategic Bitcoin Reserve

As a result of Donald Trump’s victory, the promise of a Strategic Bitcoin Reserve is becoming a reality. This initiative was one of Trump’s key proposals to appeal to cryptocurrency advocates. Under Lummis’ proposed bill, the Federal Reserve and Treasury Department would acquire one million Bitcoin using existing funds. This move would position the United States as the largest nation-state holder of Bitcoin, controlling 5% of the entire network—comparable to the country’s share of the global gold supply.

The Lummis Bill (Bitcoin Act) outlines six main components. First, it establishes a Bitcoin Strategic Reserve, consisting of a decentralised network of Bitcoin storage facilities across the country. The most exciting aspect is the plan to purchase 200,000 BTC annually over the next five years. Additional provisions include proof of reserves for the holdings, voluntary state participation, cost offsetting, and the right for individuals to self-custody their Bitcoin.

Market Update

Here is the fast five of what you need to know about the market in November 2024:

Bitcoin’s largest monthly dollar value increase in history
Bitcoin ends the month up 37.7%
SOL and XRP both flip BNB to become the 4th and 5th largest cryptocurrency
Cardano returns to the top 10 forcing out Tron
Memecoins remained the hottest category, with Doge leading all memes, rallying 161%

Video of the month

Senator Cynthia Lummis unveiling the Bitcoin Strategic Reserve Bill at Bitcoin 2024

In the news

Department of Government Efficiency

The establishment of the Department of Government Efficiency (DOGE) under President-elect Donald Trump, co-led by Elon Musk and Vivek Ramaswamy, has sparked significant interest. The department's acronym, "DOGE," aligns with Dogecoin, a cryptocurrency that Musk has previously endorsed. This alignment has led to speculation that Musk's involvement could positively impact Dogecoin's value. Many in the crypto community believe that Dogecoin could reach $1 during this bull cycle, partly due to Musk's influence.

Tornado Cash Surges Over 500% Following Overturned Sanctions

The U.S. Court of Appeals for the Fifth Circuit recently ruled that the Treasury Department's Office of Foreign Assets Control (OFAC) exceeded its authority in sanctioning Tornado Cash, a cryptocurrency mixer accused of facilitating over $7 billion in illicit transactions. The court determined that Tornado Cash's immutable smart contracts do not qualify as "property" under the International Emergency Economic Powers Act (IEEPA), overturning the 2022 sanctions. This decision has been hailed as a major win for privacy advocates and the crypto industry, though it highlights the need for updated regulations to address decentralized technologies. Following the ruling, Tornado Cash's native token, TORN, surged by over 500% before stabilizing, reflecting market optimism. Despite the legal victory, challenges remain for its developers, with ongoing cases related to money laundering and sanctions violations.

Bitcoin and Ethereum ETF Performance:

November shattered records with $6.2 billion in Bitcoin ETF inflows, including a single-day record of $1.38 billion post-election. ETF holdings are nearing one million BTC, and analysts predict they’ll surpass Satoshi’s holdings by year-end. Ethereum also saw its first instance of higher ETF inflows than Bitcoin over a four-day period (22-27 Nov).

Education

The upcoming Fantom to Sonic Migration

In the 2021 bull run, Fantom emerged as one of the leading cryptocurrencies, driven by the “DeFi Summer” narrative that was dominating the crypto space. During this period, Fantom became a hub for decentralized finance (DeFi), propelling its native token, $FTM, from a modest $0.02 on January 1 to an all-time high of $3.46 by late October 2021. This remarkable rally elevated FTM to the 28th largest cryptocurrency by market capitalization. However, the subsequent bear market took a significant toll on FTM, with its value plummeting to a low of $0.169, representing a 95% drop from its peak in less than a year.

Fast forward to today, FTM trades at $1.05, reflecting one of the strongest recoveries since the lows of the bear market. It was an early pick in our Stormrake Morning Note back in September when it was priced at $0.50, and it has since doubled in value. Over the past fortnight, FTM has been one of the standout performers, surging by over 52% and outpacing most other cryptocurrencies. This resurgence is largely attributed to the highly anticipated migration Fantom is set to undergo in December.

The upcoming migration to the new Sonic network has garnered widespread attention due to its promise of enhanced performance and scalability. Sonic is poised to become a faster and more efficient Layer 1 blockchain, capable of processing up to 200 million transactions per day. Its cross-chain interoperability, particularly with Ethereum, opens the door to a new wave of decentralised applications (dApps), increased liquidity, and broader use cases. Adding to the appeal, the Fantom Foundation is supporting this transition with substantial financial incentives, including $120 million in grants to encourage project migration.

A key figure driving Fantom’s success is Andre Cronje, the renowned developer who serves as the CTO and Chair of the Fantom Foundation (now Sonic). Widely respected within the crypto industry, Cronje’s contributions have been instrumental in establishing Fantom as a leader in DeFi. His decision to make Fantom’s code open source has inspired numerous imitators, but none have matched Fantom’s prominence. Cronje’s importance was evident during the bear market when his announcement of stepping away from the crypto space led to a significant downturn for the Fantom ecosystem. However, his return eight months later brought renewed energy and optimism, as he expressed frustration with other blockchains failing to reach their potential. This comeback revitalized the Fantom community, which remains one of the most dedicated and resilient in the crypto world. As history has shown, a strong and loyal community is often a key ingredient for the sustained success of any project.

The official Sonic Labs token migration contract will facilitate the conversion of FTM to S starting in December 2024. This process allows users to swap FTM for S at a 1:1 ratio, with the added flexibility of swapping between the two tokens freely for the first 90 days. For those who custody their FTM with us, no action will be required—the conversion will be handled automatically. Users can simply sit back and enjoy the transition.

FTM/S should undoubtedly be on the radar of any serious crypto portfolio. With its continued leadership in DeFi, consistent upgrades, and the potential of a successful migration coinciding with a bullish market, it wouldn’t be surprising to see S surpass FTM’s previous all-time high and achieve even greater milestones.