GM. Today’s headlines:
- As September draws to a close, $BTC will likely end the month up versus August.
- Today, after a recent break above the 200-day moving average $BTC is close to retesting that key level.
- Former Binance CEO Chamgpeng Zhao gets early prison release.
As the month of September draws to a close, $BTC is likely to end the month in the green, recording a gain over the past 30 days of +8.42%.
Figure 1: Bitcoin past month price performance.
While the market has been bullish in recent weeks, there remains uncertainty among many traders due to the choppy price action of the past three months where $BTC is up just +5.5%.
Figure 2: Bitcoin's choppy price action over the past three months.
News You Need to Know
- China central bank reveals stimulus package, expected to boost assets like Bitcoin.
- Former Binance CEO Chamgpeng Zhao gets early prison release.
- Former Alameda Research CEO Caroline Ellison sentenced to two years in prison.
- Tornado Cash loses motion to dismiss the charges against them.
The Big Story
Let The Money Flow
After the recent Federal Reserve 50 basis points cut in interest rates, the People’s Bank of China (PBOC) was not far behind with a package of measures designed to help China’s economy and markets.
The slew of announcements last week included a cut in a key short-term interest rate, reduction in required bank reserves, and a package to help shore up the Chinese property market.
The key announcement that had risk asset investors' heads turning was the 50 basis point cut in the Reserve Requirement Ratio (RRR) - which will free up approximately $140 billion, which can be used for new lending.
That is more money in the financial system, which can find its way into assets that can provide a return for investors.
These recent moves by both the People’s Bank of China and the US Federal Reserve are likely to have significant ripple effects globally as other central banks look to broadly align their strategies with these two major central banks.
This fresh liquidity could further increase bitcoin demand, given that it is a hard asset viewed by many as a hedge against government fiscal and monetary risks.
As the Global Liquidity chart shows, Bitcoin has historically performed very well once Global Liquidity begins to make new highs and trend upwards.
Figure 3: Global Liquidity M2 and Bitcoin price.
Right now Global Liquidity is making new highs and we may see further liquidity enter global markets as more central banks look to follow a similar path as the People’s Bank of China.
This could add further buy pressure on $BTC in the coming weeks and months.
Key Chart
Each week, our BM Pro Analysts hand-pick a must-see chart for you. This week:
Monthly Returns Heatmap
Figure 4: Bitcoin Monthly Returns Heatmap.
What it is:
- The Bitcoin Monthly Returns Heatmap is a visual representation of Bitcoin's price performance, showing the percentage change for each month since Bitcoin's inception.
- It uses color coding: green for positive monthly returns, amber for neutral, and red for negative returns.
- The heatmap helps investors quickly assess Bitcoin's historical volatility and performance patterns on a month-by-month basis.
Why this matters:
- Historical Performance Insight: It allows investors to track and understand Bitcoin's cyclical behavior, highlighting potential seasonal trends in price movements.
- Psychological Impact: By seeing the long-term performance and patterns of Bitcoin, investors can better manage emotions during periods of high volatility or drawdowns.
What’s Happening Now:
- The month of September 2024 is aiming to close approximately 10% higher than August.
- Bitcoin’s 4-year cycles are evident by examining the annual returns in the bottom row of the Monthly Returns Heatmap.
- As we enter Q4, Bitcoin is up around 55% year-to-date, which would be consistent with the historical 4-year cycle pattern of a bullish year this year.
Track this heatmap and access other Bitcoin Magazine Pro tools and features here.
The Bitcoin Magazine Pro Team.