Bitcoin Rips To $66k In Historic September, October Looms
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Cliff-Notes:
- The global central bank easing cycle, ongoing disinflation, and strong Q4 GDP estimates create the most bullish macro and bitcoin-native environment since 2020.
- Bitcoin has broken its 6-month downtrend, with long-term holders distributing and short-term holders starting to increase—a pattern typical of early bull markets.
- As bitcoin rises above key levels, including the 200-day moving average and short-term holder cost basis, a supportive macro backdrop and favorable seasonal trends suggest a continuation to new all-time highs in Q4.
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With the global central bank easing cycle commencing, continued disinflation, and strong Q4 GDP estimates, we are entering the most bullish macro and BTC-native environment since 2020.
Bitcoin soared past $66,000 on Friday morning. This 6-month downtrend for bitcoin has been very constructive—with coins moving out of the hands of flighty short-term holders and into the hands of long-term holders. LTH supply (green) has grinded higher as bitcoin's price has consolidated while STH supply (red) has grinded lower, making for a steady base of bitcoin holders who aren't willing to part with their coins at current prices.
Now LTH holder supply is starting to inflect down and STH supply is starting to inflect up, a behavior that occurs at the start of bull runs—I've marked this using green arrows on the chart below, i.e. in 2020 leading into the 2021 bull market. This also happened in January of this year when bitcoin rose ~78% from $41k to $74k. Now, you can see this pre-bull run supply shift happening again:
Bitcoin has also set its first higher high since it began consolidating back in March. This is a very constructive development for the bull market as it marks a shift in market sentiment and momentum. Buyers are gaining traction over sellers. Bitcoin is 35% off of its local low set in early August, and a supportive macro picture coupled with shifting supply dynamics raises the likelihood of a breakout from this 6-month downtrend over the next few weeks. From there, it's only a 5.5% move to reclaim previous all-time highs:
The Fed's rate cut paired with China's massive monetary stimulus are all good news. Growth remains stable in the United States with the AtlantaFed GDPNow estimate now above 3% for Q4. PCE inflation, the Fed's preferred price inflation gauge, also came in lower than analyst expectations today, lending credence to the narrative that the Fed is on its way to declaring victory over inflation.
The risk-on impulse in markets as a result of the macro backdrop is acutely visible in bitcoin, the highest beta macro asset of the bunch. Bitcoin ETF inflows are ramping back up, with Wall Street eager to capture outsized gains heading into the historically great month of October for the orange coin. The ETFs took in ~$363 million in net inflows on Thursday, the largest net inflow since the August 8th net inflow of ~$195 million, when bitcoin was at $59,000. Almost 2x the capital came into the Bitcoin ETFs at a price of $65,000 compared to when it was at $59,000. Willing to deploy almost double the capital into bitcoin at a higher price says that the market believes $66k BTC is cheap on a relative basis, and is expected to move much higher this cycle:
This has been the best September on record for bitcoin, rising 11.53% during a month that is historically weak for not only bitcoin but the broader equity market as well. Bitcoin is also catching up to the equity market which it has lagged behind for the last 6 months. Bitcoin's gains were front-loaded compared to stocks this year, possibly due to the launch of the 10 spot BTC ETFs accelerating the hype cycle, causing BTC to reach new all-time highs sooner, and subsequently plunging us into an extended period of redistribution while stocks kept moving steadily higher.
We're about to enter October, colloquially dubbed 'Uptober' as it is historically the 2nd best month of the year for BTC with an average return of 22.9%. November technically has higher monthly returns but the data is skewed by November 2013 when BTC appreciated 449.35%. October is the most consistently bullish month for bitcoin in its short trading history.
Hot off the heels of a record-setting September, and with a supportive macro backdrop including continued disinflation, resilient US growth, huge Chinese stimulus, and global central banks doing the most rate cuts since April of 2020, bitcoin is slated to have a superb Q4. Having just crossed above the 200-day moving average and the short-term holder cost basis, bitcoin has cemented itself above 2 key levels for bull market support as it sets up for a hearty bull market continuation to brand new all-time highs:
It now all comes down to earnings. As the Fed cuts rates, financial conditions are going to ease even further from their already loose levels. As borrowing for businesses becomes easier, if earnings can remain intact, the labor market will remain intact. If we see a big pullback in consumer spending (which we aren't observing), that is a reason to be cautious about the labor market and pullback from risk assets. The path of least resistance is for earnings estimates to expand under this supportive environment from the Fed, and therefore, for the labor market to be just fine. Sitting in cash at this stage in the cycle is a loser's game.
Take it easy,
Joe Consorti
Theya is the world's simplest Bitcoin self-custody solution. With our modular multi-sig vaults, you decide how to hold your keys.
Whether you want all your keys offline, shared custody with trusted contacts, or robust mobile vaults across multiple iPhones, it's Your Keys, Your Bitcoin.
Download Theya on the App Store.