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Market Lab Report - Timing on fed pivot; Bitcoin spot ETF: to launch or not to launch

Market Lab Report

by Dr. Chris Kacher

The Web3 Evolution Will Not Be Centralized™ 

Bitcoin to new highs

Odds favor the Bitcoin spot ETF being approved after today's (Wednesday's) close according to Bloomberg. If the decision is postponed, buy BTC on dips. If the ETF gets a green light, dollar cost average by buying BTC once/day over the next 30 days as volatility will be pronounced between bearish v bullish arguments. Bulls will win as long as liquidity continues to rise from central bank QE.

QE bodes well for Bitcoin eventually reaching new highs as it has done every time before after mainstream media declared it dead. Indeed, it has died hundreds of times. It is the only asset that ever made a massive comeback after blowing apart losing as much as 95% of its value more than once.

It has lost between 1/5 and 1/20 of its value several times since 2009 but made new highs each time because it is the first ever digital means for public payment, and it doesn't require a middleman like traditional methods. It is the magna carta of code. Bitcoin underscores the freedom to transact without which there are no constitutional rights. The transaction of information, money, services, and goods is fundamental to growth. Indeed, since its launch in Jan-2009, Bitcoin has well outpaced anything in the history of speculation.

Bitcoin is also no longer just a store of value. Through the lightning network, it has become a global payment system. And through level two's such as Stacks (STX) which was added to Crypto Picks on Dec 29, it will become a global smart contract platform which may then overtake Ethereum since Bitcoin's hash rate towers over all the other coins thus offers the most secure way to transact. It is also invulnerable to attack by nation-states since it is truly decentralized unlike Ethereum which switched to proof-of-stake (PoS).

This underscores how Bitcoin represents the greatest defense tool which will in the coming generation minimize hot wars since a growing majority of a nation's assets will be stored digitally instead of physically. In consequence, bombing a nation with nuclear warheads carries less economic incentive since the value is stored digitally in Bitcoin and other alternative cryptocurrencies. Bitcoin encapsulates the promise of property rights which can thwart the technology-fueled totalitarian impulses we see playing out globally. Bitcoin can help the US win over BRICS to maintain the dollar's sovereignty. Further, a proof-of-work (PoW) system like Bitcoin minimizes cyberattacks due to the uneconomic costs of such attacks. This is similar to how the military itself deters physical attacks against the country. Cold wars result since neither side wants to trigger such a destructive situation. In short, Bitcoin's PoW deters attacks in the digital domain where value is accruing and will eventually overtake physical value. This is analogous to how the military protects land, sea, air, and space. MIT's Jason Lowery has much to say on the matter.

Timing on fed pivot

The jobs report came in strong which temporarily sent CME FedWatch odds of a rate hike in March when the Fed next meets from 65% to 55%. Some members indicated rates would stay higher for longer as long as the economy continues to show strength. When the economy has faltered in past cycles, this was largely due to the Fed hiking rates too aggressively or keeping them at elevated rates for too long. The Fed then had to quickly lower rates to rescue the economy. This time may be different due to a number of factors:

=Stealth QE and rising global liquidity has propped markets since October 2023 despite the claim of balance sheet tightening. Central banks around the world must continue to service their debt interest payments.
=2024 is an election year which tend to be bullish overall for US stock markets, at least 85% of the time. Since voters vote with their pocketbooks, the Fed may keep stealth QE alive and well to ensure a Biden victory.

=They will have to print to pay for the onerous levels of interest of record debt and to pay for unfunded liabilities such as pensions which were harmed due to their exposure to bonds from the fastest increase in interest rates from near zero levels in 2022.

Crypto Corner

Note: Any cryptocurrencies added to Crypto Picks will be included in future Market Lab Reports at the end of the report. For those who invest in cryptocurrencies, please check Crypto Picks for regular updates. The exact time a cryptocurrency is added is less important than when a name pulls back to one of its major moving averages as it moves higher in what may be a sloppy uptrend due to the natural volatility of cryptocurrencies. Such pull backs can be used to time your entries and exits. Buying on strength after a consolidation also can work well.  
In addition to STX mentioned above, Ethereum (ETH) was added to Crypto Picks on Dec 29. ETH’s next big upgrade is coming in early 2024. There’s no official date for when the upgrade will go live on Ethereum’s main network, but developers did release a preliminary schedule for the tests.

Phase 1: Goerli (scheduled for Jan 17).
Phase 2: Sepolia (scheduled for Jan 30).
Phase 3: Holesky (scheduled for Feb 7).
Phase 4: Ethereum’s mainnet (not scheduled yet).

Ethereum being the number 2 coin will benefit from QE. It tends to outperform Bitcoin during bull markets though can take a few months before it really starts to run.
AI company Render (RNDR) was also added on Dec 29. Crypto AI valuation is just a scant $10 billion in the cryptospace that is currently valued at $1.77 trillion. A number of companies with huge potential are listed on Crypto Picks. RNDR is rendering web3. It is a platform for distributed GPU rendering on the blockchain. This comprises various utilities such as cloud-based rendering services for 3D graphics which revolutionizes the digital creation process.

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