Crypto’s October Seasonality & Bitcoin’s Debasement Trade “Rebirth”

A closer look at Bitcoinh lis Ethereum the crypto report. And so we have with us Jim Ferraioli, director of crypto Research and Strategy, Swab Center for Financial Research. great to see you. And it's nice see you when we've really had a n run for Bitcoin. It's managing to hold some of these high levels at, 85,000 rea stuck there, hasn't pulled back or shown the volatility that maybe the markets or the rates have done to. What do you attribute that? I would first attribute that to kind of starting points. Bitcoin went through a pretty while other areas of the market, were, you know, had hig valuations. And so as rates risr streed, oil's risen. That may have had more of an impact on other are the market. We've seen things like small caps and certain stocks kind of react to that. A, crypto is starting from a lower starting point. Given the bear market. bI would say. The other thing I'd point to is that while people were selli many of the people that were buying, and we track all this information through on chain data were crypto natives. These are people who have been here before. They've experienced crypto drawdowns. And so they tend to be less averse to buying at lower levels. And we can quantify this by looking at various measures of cost basis. If you look at investors who own Bitcoin through spot exchange traded products, they have a cost basis of about $83,000. Now that hasn't changed. It's been about that level since this time last year. However, we can look at any Bitcoin that's been acquired in secondary markets earlier in the year. That had a cost basis of about $78,000. And that's actually come down to about 76 $75,00 And so that tells you that digital natives have been the ones that have been buying .k starting points matter and that who's been buyi and who's also been selling can explain some of the resiliency here. Yeah. I don't want to run out of time. I know you were talking about Octoberhe seasonality and Bitcoin's media in October return is historically been about 11 to 14%. I'm just giving this out. If we have time, we can go back to this. But it's historically a track record for Bitcoin during October has been particularly good. I do want to get to altcoins and how they haveutperformed. Can you talk about that as well? Sure. So a quick one on October seasonality typically a good month for Bitcoin and crypto markets broadly in the crypto world. Some people refer to October as October. But if you look a recent performance in altcoins, they've really put on a strong rally these past couple of weeks. And there's something notable here. We track about the top 25 altcoins, and over 90% of them ha outperformed Bitcoin over the past few weeks. We flagged this actually as a short term negative. Typically when you see this level of bre it's actually occurs at periods where then maybe Bitcoin might reassert some leadership or the market may take aher. So we're not necessarily necessarily saying this is the end of the recent crypto run. But again, it's an indication that prices have kind of potentially gotten ahead of themselves here. now what are some of the catalysts for the next leap of faith here in the world of Bitcoin? I know that we've had much of the inflows happening today actually happens to be a day that broke the streak. We're actually seeing some outflows. The inflow streak has been snapped. It saysere on one of the headlines. But the big picture is that it done very well. And what we don't have the Clarity Act, are there any sort of things that you're looking for in the forward few months ahead that weuld also take note of? Crypto investors have really looked through the disappointment of the Clarity Act not passing in the Senate, and they've actually really celebrated the fact that other regulatory agencies have stepped in. And there is actually a benefit here. In the short tt provides regulatory clarity using existing laws to create a framework, and it's more narrow. These are securities agencies and regulatory bodies that have been studying the crypto market for several years. Often when you put a bill through Congress, lots of little additions get put in. And so again, it regulation. And that's been viewed as a positive. And so investors have been maybe potentially buying. Given that that does provide some insight. The other thing is, over the summer, you had theury Secretary start talking about increasing the size of Treasury buybacks. The fed is now raising rates every time theder, the cost of maint and paying the existing government debt also increases as the government continues to issue new debt. And so investors have attributed this to the rebirth of the debasement trade, which was very popular over the past couple of years. And so, again, it's another short term catalyst, but what we're really focused on in the next few months is what happens with midterms. We still view crypto as a bipartisan topic in Congress. The Clarity Act did pass the House, with over 70 Democrats joining Republicans to pass it. It also did fail in the Senate on a bipartisan basis, too. And so we would expect maybe a reaction to whatt ultimately, we think that if a viable dip, given theould b historical bipartisan nature. Yeah. Jim, it's great to speak with you. Thank you so much and good luck there. We really appreciate it. Jim Ferraioli, director of