Full Send Everything 🚀
The FED Pivot is HERE
👋🏽 Hello everyone, gm gm, WELCOME BACK to another edition of the Overpriced JPEGs newsletter!
Today, we're here to give you a lowdown on this week’s FOMC meeting, in which the FED decided to stop raising interest rates & promised lower rates for 2024.
This event could mark an inflection point for the wider economy & our beloved crypto industry, giving us a bullish 2024.
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The moment we’ve all been waiting for is here (...almost)
During yesterday’s FOMC meeting, FED Chair Jerome Powell gave the green light for memecoins to pump back to ATHs and said investooors should prepare to leave their parent’s basements. 🚀
Okay, I admit those weren’t the exact words he used, but if you read between the lines, that’s basically it.
The FED left interest rates unchanged at 5.25% - 5.50%.
They also said they’re done raising interest rates for now, and they plan to even lower them 3 times next year, starting in the second half of 2024.
Now, since they lied about raising rates 3 times in the second half of this year, I think they’re also lying about lowering them so late next year – I expect the lowering to happen much sooner and lower.
Regardless, the main takeaways are:
The FED is happy with the current decline in inflation
They’re done raising interest rates & plan to lower them
They expect a slight increase in unemployment
They predict moderate economic growth over the next couple of years
All of this means that the stars are aligning for risk assets like stocks & crypto, and that we should prepare for a super bullish 2024.
Let’s go over the various factors that will give us a 2024 where generational wealth will be made by those who start acting today.
Macro Overview 🌐
In 2024, the FED plans to cut interest rates by 75 basis points & bring inflation to 2%.
Even the US Secretary of the Treasury, Janet Yellen expects that to happen.
Pair that with the fact that US Elections are coming in 2024 & we can expect an extremely bullish period.
Here’s a chart (blue line) predicting what’s likely in store for the S&P 500 in 2024, based on the performance from past election years.
If you’d like more context about this chart, you can read our Stars Are Aligning report here.
The markets are already reacting.
The S&P 500 is just a few % away from its ATHs.
The Dow Jones Index just surpassed its all-time high.
And, the NASDAQ is sitting at ATHs too.
Why am I talking about the stock market? Because crypto is heavily correlated with stocks. Tech stocks to be specific.
Therefore, when trying to predict where crypto is headed, it’s good to look at what's happening in the stock market.
Historically, the NASDAQ index, which includes many tech stocks, has been the best indicator for crypto.
NASDAQ 📈 = Crypto 📈
NASDAQ 📉 = Crypto 📉
Right now, the NASDAQ is sitting at an all-time high while Bitcoin is still 40% away.
Do with that information what you will. 😁
So we’ve now established that macro is bullish! But what about crypto? Does it have anything going for it in 2024? Let’s see.
Regulatory Clarity-ish for Crypto 🔍
SBF was found guilty
CZ is out of the picture
Binance settled with the DOJ
Ripple was deemed ‘not a security’
Grayscale won its lawsuit against the SEC
What does all of this mean? A few things.
Firstly, all the big bad actors are gone (...we hope). There’s no more smoke in crypto. That was all cleared when Binance settled with the DOJ & paid a $4 billion fine.
Secondly, as much as the SEC tried to crack down on crypto, they’ve been continuously unsuccessful, showing that they can't hurt this industry in the long-term.
Thirdly, institutions like BlackRock, Grayscale & Franklin Templeton have met with the SEC multiple times during the past 30 days, indicating that a Spot Bitcoin ETF is just about to be approved. ✅
Bitcoin’s Supply & Demand Shock 😲
I don’t think I need to tell you that a Spot BTC ETF is coming, right? You know that already.
What I will say is this. Here’s the impact that the ETF had on the price of Gold.
The same will happen for Bitcoin. The demand is about to go through the roof. 🚀
Once the Spot ETF is approved (most likely coming before January 10th), billions of dollars will start flowing into crypto.
To add fuel to the fire, the Bitcoin halving – which cuts the miner's reward by half, thereby decreasing the rate of new Bitcoin creation – is just 120 days away.
The ETF approval, which will increase the demand for $BTC, paired with the halving which will decrease the supply of $BTC, will cause a supply and demand shock for Bitcoin like we’ve never seen before.
That’s starting to happen already… The amount of Bitcoin lying on exchanges is at an all-time low.
There’s only ~2.3 million $BTC up for grabs right now.
And those who already own $BTC aren’t thinking about selling. More than 57% of all $BTC in circulation has not moved in the last 2 years. 🤯
We’re seeing similar trends happening on Ethereum too.
Ethereum’s Supply & Demand Shock 😲
Once the Spot Bitcoin ETF gets approved, I think one for Ethereum will follow shortly after. BlackRock has already filed for it, so it’s only a matter of time.
In anticipation of this ETH ETF, I think everyone will flock to buy $ETH, driving the demand up. 📈
Furthermore, similar to how nobody’s selling Bitcoin, nobody’s selling $ETH either.
In fact, people choose to stake their $ETH instead to generate a 3.5% annual yield. The amount of staked $ETH is currently at all-time highs, with no indication of slowing down.
In addition, at the current rate, Ethereum is burning 0.5% of its supply every year. That’s nuts.
To add fuel to the fire, Ethereum’s EIP-4844 is planned for early 2024.
This upgrade will lower transaction fees and boost efficiency on Ethereum and L2s by introducing a new way of storing temporary data.
This will likely increase onchain activity on Ethereum & L2s, which in turn will lead to even more burned $ETH.
Ethereum is about to enter its first bull market in which it’s got a burning mechanism. The amount of $ETH that’ll be burned in the next few years will be insane…
A TL;DR 🧵
Friends, everything is aligning right now…
Inflation dropping to manageable levels
FED to cut interest rates
Stock market reacting well to upcoming rate cuts
Crypto prices rising alongside stocks
Upcoming Bitcoin ETF will boost Bitcoin demand
Bitcoin halving set to reduce Bitcoin's new supply, causing a supply shock
Holders not selling Bitcoin and Ethereum
Staked Ethereum is at ATHs
Ethereum's upcoming upgrade will increase onchain activity, leading to more burned $ETH, making Ethereum more scarce
It’s all coming together, just as predicted 1 month ago.
If you’re not bullish right now, I don’t know what to tell you apart from the fact that 2024 will most likely be a massive year for investors.
Don’t f*ck it up!
If you’re interested, I’d love to welcome you on the PRO side, where we deliver weekly onchain analysis paired with industry insights that help you invest and build successfully in web3!
Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.