Long-time followers know that I am not a “crypto-guy”. I usually focus on traditional markets, economics and politics. However, in the last few years crypto (and specifically Bitcoin) has become a legitimate and established financial product, even on Wall St. As we move into “Uptober”, I have a few thoughts on Bitcoin currently and where it might go moving forward. Let’s dive in…
First, let me say that I like Bitcoin here. As I mentioned, I’m not a crypto guy but in my view Bitcoin has a similar investment thesis as gold. It could easily make up a few percent of any investor’s portfolio and provide some diversification. That is now much easier to accomplish with the Bitcoin ETF’s being approved earlier this year. I think it will only become more popular and common as younger investors who were always familiar with Bitcoin begin to replace the older, more skeptical ones in the market.
Crypto guys often refer to the month of October as “Uptober”. This is because of Bitcoin’s incredible seasonality and performance around the end of the year. Q4, and specifically Q4 during election years, is historically a very strong period for Bitcoin. Looking at the last decade October is by far Bitcoin’s best and most consistent month. It has been positive in 9 of the last 11 Octobers, with an average gain of +22.9%. Plus, look at it’s Q4 performance during the last two election/halving years:
2016:
October: +14.71%
November: +5.42%
December: +30.8%
2020:
October: +27.7%
November: +42.95%
December: +46.92%
In addition, if we simply pull up the Bitcoin chart it looks bullish from a technical analysis perspective, as a massive bull flag pattern jumps off the screen. Bitcoin has climbed sharply from the cycle bottom in late 2022 to it’s all-time high of ~$74,000 earlier this year. For the last 6 months or so it has been consolidating into a clear channel and now looks like it could be set to breakout to new highs.

Interestingly, when you look at Gold (which has recently exploded to new all-time highs), it traded in a very similar pattern over the last couple of years. In my opinion, Bitcoin could be setting up to follow it’s lead.

I’m also not the only one who has noticed this setup. My friend Eli (eliant_capital), who has nailed the recent growth rebound and also the commodity cycle this year:
Of course, I need to briefly mention Bitcoin’s politcal angle as well. We are now just 28 days out from Election Day and I still have Trump as the favorite to win. In the short-term, Bitcoin will likely act as a proxy for Trump’s victory odds, which could be very bullish on it’s own. It is clear that the Trump administration would be much more friendly to Bitcoin and the crypto industry as a whole. However, I think regardless of who wins (assuming Harris doesn’t go full Elizabeth Warren) Bitcoin will still do well. Both parties will continue to run massive deficits and debase the Dollar.
This leads into why I also like Bitcoin’s longer-term outlook. I think regardless of the macro environment outcome that we get this cycle, Bitcoin will continue to climb. If the Fed does avoid a recession and growth/inflation begins to rebound, markets will be off to the races as a “new cycle” narrative takes hold. Stocks, commodities, assets and yes Bitcoin will all benefit greatly. This narrative could also tie into the recent performance of gold, suggesting that the Fed is making a mistake cutting and a potential return of inflation.
On the other hand, if we do get a recessionary environment and unemployment climbs dramatically, the Fed will cut rates much faster than is now projected. They will then shortly after follow China’s lead and announce their own stimulus measures. This would officially bring about QE5, which will certainly be much bigger than QE4, as all QE rounds must be larger than the previous ones to be effective. This would be massive government spending, loosening financial conditions, ballooning deficits, along with sky-rocketing markets and assets. Bitcoin will take full advantage of QE5 just as it did with QE4, rising from ~$5,000 in March 2020 to ~$60,000 just one year later.
Either way, after consolidating for most of 2024 I think Bitcoin is now set up nicely in both the short and longer-term. Seasonally, technically, politically and fundamentally.
DISCLAIMER:
This is not financial advice. For entertainment purposes only. Make your own decisions. Personal opinions. I am not responsible for any losses.