The Run after The Race

October 20, 2020

Welcome to another edition of Crypto: Decrypted, where we look at the happenings in, of and around the world of crypto assets and the crypto marketplace.

Wall Street is continuing to pile into bitcoin, with the latest juggernaut Fidelity publishing a 29 page report touting the value of Bitcoin as an alternative asset noting that bitcoin is “fundamentally less exposed to the prolonged economic headwinds that other assets will likely face in the next months and years”, and continued to say that, “In a world where benchmark interest rates globally are near, at, or below zero, the opportunity cost of not allocating to bitcoin is higher.”  Folks, this is Fidelity. If they are beating the drum, then it’s clear the tipping point is here – many are now realizing the opportunity and demand is growing. While I could continue to cite the many examples of this (and I will in future editions) this edition I want to talk about what we here at TRADECRAFT Capital call “The Run after The Race” as we prepare to enter the mother of all bull runs.

You see, we’re past the Halvening event, demand is growing, and the latest bull run has already started.  However, over the past couple of months, though crypto technicals have been solid, we’ve been holding in a sideways channel with the common questions being asked, notably, are we going up, down, or was this it and we’re now at a plateau?

We see this as the pause – a breath if you will – before the great breakout and it is clearly understood why this would be the case.  It’s a function of “layered event-driven uncertainty.”  Markets hate uncertainty and we have a lot of it right now.

Globally, we have a pandemic with no real end in sight, resurgences in countries that were once stable, and a real concern over the general state of the world, including personal health, financial markets, and everything else in between.  It’s even more poignant here in the USA, where we have a country divided, COVID cases growing in many states and overall concerns about financial and general well-being.  One of the most important layers fueling all of this is political, as we face a potential reshaping of the Supreme Court, Congress and, importantly, perhaps one of the most important elections of our times.

Ultimately, as far as the markets are concerned, it matters more that a president is chosen than which president is chosen. Once we get on the other side of the election, and once the uncertainty clears, we could well see markets higher. Additionally, when we see another financial stimulus package from Congress get passed, we could also see greater highs. Until then, the uncertainty will temper markets.

Once the event of the election is resolved however, and Congress passes another stimulus package, we expect the next run to continue to take shape.  This is “The Run after The Race.”

While nothing is guaranteed, our base case is that this run gains speed December and continue into Q1 2021.  Importantly, this run was already predicted based on the Halvening event in May. Now, with Wall Street moving aggressively into crypto, if the US Dollar weakening with likely more money printing in sight, and pandemic-induced challenges continuing, the table is set.  Bitcoin and crypto assets were designed to address these very issues, and their time is now emerging.

 I look forward to staying in touch and, of course, continuing to Decrypt: Crypto for you!

About the author James Diorio

James is a Principal and Chief Executive Officer of Tradecraft Capital.