Long-term Investors HODL as Potential Catalysts Approach

Key Takeaways

• China FUD causes crypto markets to sell-off for the second week in a row. We take a deeper dive to understand the broader implications (or lack thereof) of the most recent regulatory crackdown announced by Beijing.
• Leverage and funding rates are trending lower, signaling uncertainty among short-term market participants.
• Despite recent volatility, HODLers continue to accumulate bitcoins, leading to an increasingly illiquid bitcoin supply.
• The Lightning Network allows Bitcoin to gain adoption as a global currency while saving consumers and merchants billions in annual costs.
• Seasonal trends are starting to look favorable for investors as October has been an overwhelmingly positive month for Bitcoin.
• We view the potential approval of a futures-based Bitcoin ETF and increased confidence surrounding a successful transition to ETH 2.0 to be near-term catalysts that clients should have on their radar.
• Bottom Line: BTC is trading below its 200-day moving average. For those with near-term liquidity needs, it may be suitable to wait until we re-test this level. However, we are steadfast in our view that any near-term selling is an opportunity to buy as we anticipate a risk-on environment through the end of the year to yield a run at all-time highs for both Bitcoin and Ethereum.