The Rake Review: June 2024

A Bearish End to a Bullish First Half of 2024

Arguably the most impactful six months in Bitcoins’ history has come to a close. The long awaited approval and trading of the Spot Bitcoin ETF occurred within the first fortnight of the year. This momentum propelled BTC to new all time highs of $73,737.94 prior to the fourth Bitcoin Halving (the first time a new BTC ATH has occurred before the halving event). Shortly after, we saw BTC trickle its way back down into the 55k region before attempting to reclaim the key 70k level, this was on the back of the Ethereum Spot ETF approval hype and bullish sentiment.

Whilst BTC reclaimed 70k for a mere 3 hours, the first domino fell in the form of a hawkish statement by Jerome Powell, which saw a quick shift in macroeconomic sentiment thus causing BTC to relinquish 70k. This statement on the 1st of June set the tone for the rest of the month as we have seen BTC continue to fall and is currently battling to stay above 60k. To add insult to injury, it was recently announced that Mt. Gox were set to begin repayments of lost funds in July totalling $9 Billion. A 15% pullback from the high of the month, not to mention altcoins bleeding and some finding themselves at prices not seen since October 2023 with 50% pullback from their highs on the year.

Could June be a teaser of what to expect over the back half of the year? The macro sentiment shift has made its way to cryptocurrency which has seen BTC and altcoins experience the brunt of the shift. The shift in Bitcoin sentiment can be measured by the ‘Fear and Greed Index’, when sentiment is bullish, the reading of the index is higher. As seen below, we currently sit at a reading of 40 and fearful, a harsh contrast to the beginning of the month where the market was greedy with a reading of 72.

As we look onto the second half of the year and what it may look like for Bitcoin, one form of analysis we conduct is a technical outlook on a weekly timeframe. The chart below shows a key similarity between this current cycle and the last, in 2021 we saw BTC set an ATH before a severe pullback into the ‘Golden Ratio’, this refers to the zone of 0.5-0.618 of the Fibonacci Retracement tool. When looking for potential pullback levels, the Fibonacci retracement is a crucial one, within this tool, we look for the ‘Golden Pocket’ which more often than not sees price enter that zone. This not only occurred last cycle, but there is also a corresponding Fair Value Gap (blue rectangle) around the same price region. These fair value gaps often get filled (filled 80% of the time), a FVG being filled means price action enters the box and fills the majority of the box (yes there were recent wicks into the FVG, but it didn’t fill the majority of the box, therefore it is still active). These price levels of ~50-52k have been a pivotal level for past price action for BTC, providing both support and resistance. This remains valid as shown by the orange horizontal line. As this is a higher timeframe analysis, it would be expected that BTC reaches these levels within a few months IF it is to come down at all. IF BTC is to reach these levels, it may be treated as an opportune time to pick up some more BTC to strengthen your BTC positions.

A clearer view of the chart can be found here: https://www.tradingview.com/x/CcjdM0Cq/

Whilst the sentiment has shifted, with weekly technical analysis potentially suggesting lower prices over the next few months, this does not alter our long term view on Bitcoin. If we are to refer back to the last cycle, the pullback was not the end of the bull market as we saw BTC rally up and create another ATH. Coupled with the expectation of 2025 being an extremely aggressive year of interest rate cuts. We are expecting to continue on with the bull market and push to never before seen prices in late 2024 or 2025 (as seen by the dashed arrow on the chart above).

Two of Bitcoin's Sharpest Minds Meet at BTC Prague

Here are the key takeaways from BTC Prague

(from our Technical Director, Douglas Hemingway)

Bitcoin is still a very young asset. The attendees at BTC Prague are extremely captivated and all in on the asset. However, mainstream has barely scratched the surface of BTC. Meaning there is a lot of growth to go.
Over the last six months, government actions across the world have encouraged a growing push towards privacy and self custody over your assets. There are a number of projects quietly working on technical solutions to ensure freedom.
Notes and Other Stuff Transmitted by Relays (NOSTR) is set to play a big part in the future of the internet. NOSTR is a messaging protocol but also so much more. It unlocks a new layer of the internet that will include payments and all sorts of apps. Think of it as an open “App Store”. Lots of interesting projects are building on top.

Buy Bitcoin, don't get lost in the allure of Altcoins:

Everyone who is familiar with crypto understands that in a bullish environment, altcoins will outperform BTC and in a bearish scenario BTC outperforms altcoins. BTC is currently down 20% from its all time high. Whilst BTC has already created a new all time high and is currently teetering on the 60k level, altcoins are continuing to suffer. Major altcoin projects such as FTM, XRP, DOGE and ADA are nowhere near touching their previous all time highs. In fact, FTMs peak this cycle of $1.22USD was still 181% away from creating a new all time high, ADA 281% away from its ATH. Not to mention, these coins are all currently down at least 50% from their CYCLE highs (set only a few months ago).

We have had the beginning of a bull run seeing BTC rally from 15k to creating new all time highs at 74k, whilst these altcoins that are supposed to outperform BTC have failed miserably to do so. In fact, BTC has outperformed over 90% of the top 100 cryptocurrencies in the last 12 months, but has also outperformed every single cryptocurrency over its lifespan.

If one is to enter the crypto market and actively chooses to avoid BTC and purchase other projects in hopes of outperforming BTC, over time they are likely to lose. They may outperform BTC for one bull run (at most), but Bitcoin’s CAGR of 155% p.a. has yet to be beaten (by any asset class, not just crypto) and shall continue to do so.

Top 10 cryptocurrencies by market cap

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

BTC ETFs have experienced major net outflows this month.
BTC is down 11% on the month, with fear that it could fall more due to Mt. Gox FUD.
TON is the only coin within the top 10 to return a positive month, helping it jump DOGE and sit in 9th.
The total crypto space has lost over 11% in market cap this month.
Some Altcoins have retraced over 50% since their cycle high.

Video of the month

Michael Saylor's 21 Rules of Bitcoin (BTC Prague 2024)

In the news

Mt Gox set to begin Bitcoin cash repayments in July 2024, rumoured to be worth $9 billion USD:

This recent Mt Gox news may have been the catalyst for BTC crashing down to 60k. Whenever there is an announcement regarding Mt Gox distributing/repaying stolen funds, BTC tends to dump. The recipients are likely to withdraw their funds that they haven’t had access to for nearly a decade. The threat of these repayments often create FUD within the market.

Only one interest rate cut this year, 2025 will be an aggressive year for cutting:

Coming into 2024, it was expected that the US would see three interest rate cuts. Following the most recent FOMC statement, the expectations have been lowered to only expect one cut of 25 basis points.

We can anticipate 2025 to be an aggressive cutting season with FOMC now seeing 5 rate cuts totalling 1.25 percentage points.

A year of aggressive rate cuts will likely result in bullish price action from Bitcoin and other risk on assets. Could we be in for the frenzied bull market that every market participant is eagerly waiting for? Only time will tell, but if rate cuts go to plan, probability should suggest a good chance of BTC finally reaching six figures and the bull market to be in full swing.

Saudi Arabia has declined to renew their Petrodollar contract...

For the last 50 years, Saudi Arabia has sold their oil to the world in the currency of the United State Dollar. This deal was signed in 1974, just two years after the US decoupled its currency from Gold and moved to the USD. With Saudi being able to settle their oil sales in any currency regardless of who the deal is between is a major threat to the USD but bullish for other currencies. Bitcoin may also be used to settle a transaction, thus strengthening the long term bullishness of Bitcoin. Could this be the beginning of the end for USD as the global currency, will another currency fill this void, potentially Bitcoin.

Julian Assange Free, Crypto Community Rallies Around Him

Wikileaks founder and long term Bitcoin advocate Julian Assange has been freed from his imprisonment in the UK and is set to take a plea deal which shall see him return home to Australia without the need to serve any more prison time.

The crypto community has rallied around Assange as an anonymous donor has gifted him 8 BTC, valued at ~$729,000 AUD. These donations have covered Assange's jet and recovery costs, which totaled $520,000 USD.

ASI Token Merge (MUST READ FOR THOSE WHO HOLD FET, AGIX OR OCEAN)

As Artificial Intelligence continues to gain traction within the world, AI cryptocurrencies follow suit. Fetch.AI (FET), SingularityNET (AGIX) and Ocean Protocol (OCEAN) are three of the largest AI projects within the crypto space. These three projects have seen astronomical gains since the AI hype began in late 2022, FET is up 2900%, OCEAN 500% and AGIX at 350%. It has been announced that these three projects will merge into one project, Artificial SuperIntelligence Alliance (ASI). This merge is set to launch on July 15.

For those who hold any of the three tokens, they will need to be converted into ASI. There will be two options:

For those holding tokens on a centralised exchange:

Tokens should automatically be converted by the exchange

For those holding tokens on a hardware wallet:

A swap mechanism will be available that users will be able to access to and swap their tokens

Conversion rates into ASI:

FET will migrate to $ASI, at a conversion rate of 1 FET to 1 $ASI
AGIX tokens migrate to $ASI, at a conversion rate of 1 AGIX to 0.433350 $ASI
OCEAN tokens migrate to $ASI, at a conversion rate of 1 OCEAN to 0.433226 $ASI

The existing FET, AGIX and OCEAN tokens will continue to trade on exchanges independently. Once third-party integrations are finalised, the ASI token will be launched and FET, AGIX and OCEAN will cease to trade independently and merge to the ASI token.

How to Take Care of Your Crypto Tax This Financial Season

From Our Partners over at Crypto Tax Australia

Tax Planning & CGT Loss Harvesting

The crypto market has had some great momentum.

The ups and downs of crypto during the current bull market cycle can affect the way your potential tax liability will fall at the end of this financial year.

Given we have had a huge run since November to specifically March/April due to the BTC ETC news, ALT coins and particular memes coins. The market has now come off these highs quite substantially, mostly for ALT coins, which for some are down at least 50-70% since their high in March and April.

Your entire capital gains and losses are combined within the financial year and the remainder net capital gain, if any, will be added to your income and tax applicable to your marginal tax rate.

On the assumption that you have made any REALISED gains this financial year, (coins sold for a profit to either fiat or another coin), it may be worthwhile reviewing some of your positions, particularly any ALT coins that may be in an unrealised loss position and turning this into a realised loss, i.e selling.

This means that if you have had any capital gains during this financial year, there is still time to offset these against any potential unrealised loss positions you may have, offsetting the current realised capital gains to date and lowering any potential tax liability.

This must be done prior to the end of the 30th of June, this Sunday!!

Be aware however that if you are looking to buy these alt coins back at some stage, as you believe there will be future growth, you can do so, however your cost DATE will be reset for the 12 months 50% CGT discount, so you will need to weigh up this benefit in respect to our particular circumstances and outlook.

2024 Tax Preparation

For those that would like to begin their preparation of their tax preparation in July/August please send an email to (info@cryptotaxaus.com.au) and they will send out an enquiry form to begin the process.

This will be particularly beneficial to those that have made some significant realised gains this financial year and would like to know their potential tax liability and plan accordingly.
Note, that we can prepare the reporting and an estimate of potential tax liability, however lodgement and payment will still be your tax return due date as we can hold off lodging until such time.

For those that have not watched the Tax Planning Livestream the link is below:

Written by Alexandar Artis

Memes of the month

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