Market Overview

This past week was eventful for both the crypto and U.S. stock markets. The Dow Jones and S&P 500 both closed higher on Friday (November 8), while the Nasdaq remained steady. Gold futures dipped slightly to $2,691 per ounce, and oil hovered around $70.4 per barrel.

Bitcoin reached a new high of over $77,200 before settling around $76,000. Most altcoins rallied, though some saw minor adjustments, pushing the crypto market capitalization to $2.731 trillion. The U.S. Bitcoin spot ETFs saw positive inflows for the sixth consecutive day, bringing in $293 million after a massive influx on Thursday. Ethereum spot ETFs also had inflows totaling $85.9 million.

Tether printed an additional $1 billion USD, often seen as a bullish signal for the market, reflecting increased demand for USDT in the crypto space. Overall, Bitcoin has consistently hit new highs recently, coinciding with the U.S. election results. Google searches for “Bitcoin” have spiked, and BTC’s rise has fueled significant increases in several altcoins.

Below is an image often shared by experts, reminding us of the cyclical nature of markets: “Hard times create strong hands. Strong hands create good times. Good times create weak hands.”

1. Understanding the Cycles and FOMO in Bitcoin

The events of 2020–2021 were dismissed by some as anomalies unlikely to recur. Yet, BTC continues to follow a four-year cycle with periods of decline followed by renewed optimism. Assets like Bitcoin have their cycles, driven by inherent forces of greed and fear.

Why Does Money Exist?

Former Sotheby’s CEO Tad Smith, who began his Bitcoin journey at age 57, reflects on what makes money valuable. As the world’s highest-grossing auction house in 2023, Sotheby’s CEO explained, “The more I learned about Bitcoin, the more I questioned my understanding of money itself... I could explain why one painting was worth $20 million and another $0.2, yet I couldn’t stop thinking about what gives something its worth... and then I understood the value of Bitcoin.”

For those who enter the crypto space, understanding Bitcoin often leads to a greater appreciation of it as a store of value. But to begin, we must ask, “What is money?” Money’s purpose is to facilitate exchange, enabling people to trade goods and services without needing direct barter.

Why do we need a medium of exchange? In ancient times, people bartered—swapping chickens for watermelons, for example. But bartering isn’t always convenient, so money emerged as an intermediary, simplifying exchanges by providing a common standard.

Why Does Money Hold Value?

Money’s value is rooted in societal consensus, bolstered by trust in the issuing authority (like governments) and its stability as a currency. In Bitcoin’s case, its value stems from a trust in mathematics and the strength of its community.

Why Do People Trust Money?

Trust in money comes from its stability, acceptance by others, government backing, and sometimes its intrinsic or communal value. People trust money because they believe others will also accept it in exchange for goods or services.

Why do we keep innovating with money? Money evolves to meet society’s changing needs, especially as technology progresses. Societies have used metals, then paper money, bank cards, and now digital currencies to facilitate faster, more secure, and borderless transactions in a digital world.

By answering these questions, those exploring Bitcoin can understand why it holds value as both an asset and currency.

Post-U.S. Election 2024 Update

The recent election saw pro-crypto advocate Donald Trump winning the U.S. presidency. Many crypto-supporting legislators also secured key seats in the U.S. Congress. With a majority of crypto supporters in Congress, the market outlook for crypto has become more optimistic.

Currently, both media and American citizens are increasingly discussing storing BTC as a national asset. This idea, once considered radical, has gained traction, signifying how far Bitcoin has come—from obscurity to criticism, to widespread acceptance as a legal tender in some countries, and now potentially a U.S. national asset.

Game Theory and Bitcoin

If the U.S., the world’s largest economy, starts storing Bitcoin, other economies may begin seeing Bitcoin accumulation in national reserves as normalized. Similar to how MicroStrategy’s long-term BTC holding inspired other corporations to do the same, a U.S. initiative to store Bitcoin could lead other countries down a similar path.

Around the world, countries accumulate gold and other resources to remain competitive. If the U.S. begins holding Bitcoin, other nations may follow to avoid being left behind if BTC appreciates. Trump’s election victory may accelerate this “game theory” in action.

Congresswoman Joana Cotar noted that if the U.S. buys Bitcoin for strategic reserves, European nations may feel a fear of missing out (FOMO). This theory suggests that U.S. actions could lead other countries to follow suit.

Additional Insights

• Bitcoin Price Prediction: VanEck’s CEO suggests that Bitcoin’s value could reach half of the total gold market cap, estimating a BTC price of around $300,000. He clarified that this projection is reasonable, not overly optimistic.
• SEC vs. Kraken: The SEC has requested that the court dismiss three defenses raised by Kraken in a lawsuit for securities law violations, arguing that Kraken’s defenses lack legal foundation.
• China’s $1.4 Trillion Stimulus Plan: In response to economic challenges, China approved a massive plan to allow local governments to restructure debt and stimulate growth, coinciding with Trump’s return to the White House.
• EU LNG Imports: EU may shift from Russian LNG imports to U.S. sources, with EU Commission President Ursula von der Leyen mentioning that Trump’s presidency could reshape EU-U.S. trade negotiations.
• Ethereum Foundation Reserves: Ethereum Foundation revealed a reserve of $970 million, with over 81% in crypto assets (primarily ETH). In recent years, EF invested around $240 million in Layer 1 development and new organization support.

Disclaimer: This article is not financial advice. The information provided is for educational purposes only. Always consult with a financial professional and make independent financial decisions.

‍