Breaking Out From 2021 Highs

Happy November Bitcoiners! We hope you all enjoyed dressing up and handing out candy last night. Or, perhaps you are so laser eyed that instead of celebrating Halloween you were re-reading the Bitcoin Whitepaper which, as we all know, was published on October 31st 2008. Sixteen years later, it has grown from nothing more than a discussion into a globally distributed $1.5 trillion asset class powering the fastest growing ETF category launch in history. All the while it has been left for dead four times and risen again. Whether we see new all-time highs in the months ahead is unknown but either way Bitcoin is here to stay and cannot be ignored.

Breaking out from “Chopsolidation”

October was less of an “Uptober” than many had hoped, but up it was and so the nickname can stay for another year. It’s possible that the US election in the coming week could build on the progress made last month, especially given that chart resistance was breached, if in a somewhat unenthusiastic move. Up is still up and a breakout is still a breakout. The path of least resistance, from a technical analysis perspective, is higher, but we continue to encourage clients to make no assumptions given Bitcoin’s famous volatility. Size your positions accordingly.  

Source: Bloomberg (as at October 31, 2024)

Source: Bloomberg (as at October 31, 2024)

There are many reasons driving Bitcoin’s recent price run, most notably where we are in the cycle. The price of Bitcoin has rallied strongly in the aftermath of each US Presidential election in the past – the winner made no difference. We’re not making the argument that US politics, per-se, is the driver of price appreciation. Rather we believe that the Bitcoin cycle has been more governed by the halvings which, like Presidential elections, occur every four years. The election often marks the start of the next leg up so investors should be mindful of the price action in the weeks ahead. 

Source: @MaxBecauseBTC on X. https://x.com/MaxBecauseBTC/status/1795853733877752199

Ultimately, we think better regulatory clarity and continued adoption will drive the price. But we’d like to leave you with the big macro argument held by many Bitcoiners as the driving factor. 

The US, along with the rest of the developed world, is overburdened with debt that they cannot pay at current interest rates.

The US government is currently spending over 40% of income taxes on individuals on debt servicing. With interest charges alone consuming so much government revenue it is hard to see how the budget is balanced anytime soon. Further deficit spending, of course, leads to higher debt levels, which leads to higher interest expense and so on. Add to that unfunded entitlement programmes, estimated by the Cato Institute to be $80 Trillion in 2023, and the problem is clear. The US, Canada, and the rest of the developed world has too much debt. The only way out is inflation. And Bitcoin, over the past three years, has shown itself to be the best inflation hedging asset available. Built for the Internet, globally accessible, uncontrolled by government. Plan accordingly.  

Good luck in the month ahead. With the US election next week, it should be exciting to say the least.  

– Elliot Johnson CIO, COO Evolve ETFs

Source: Shutterstock Credit: Godlikeart

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